FIGURES released this week show that the fortunes of Liverpool’s commercial property sector are yet to return.
The Red Flag Alert report, published quarterly by Begbies Traynor, indicates the levels of business distress across key business sectors and UK regions.
The report shows that just over 40% of the city’s companies facing critical problems are related to the construction industry, and almost 10% are property companies.
These figures echo the reality facing my clients – a market that has gone almost completely stale and which is resulting in a high number of property and building-related businesses failures.
The lack of public sector building and refurbishment projects has had a major impact on Liverpool’s construction industry and the sectors that feed into it.
Despite the fact that we have formally entered a period of recovery, businesses remain cautious and are still unlikely to shell out on new office space.
Many aren’t in a position to take out a commercial mortgage on new freehold premises either, and it is this lack of confidence that continues to affect the leasehold market.
Taking on a 25-year lease seems an unlikely proposition when many owners and managers battle even to stay afloat.
Increasingly swift legal action against debtors has also had an adverse affect on property and construction firms.
In an industry where late payment is a notorious problem, construction companies increasingly find creditors unwilling to extend their payment terms and many have found themselves on the wrong end of a county court judgment as creditors attempt to maximise cash flow.
Cash flow and credit control remain essential priorities for the region’s businesses.
For property and construction companies which aren’t already doing so, now is the time to keep a close eye on overdue invoices and put in place measures to proactively manage their cash flow situation.
Taking immediate action at the first sign of trouble is absolutely essential as we enter into the second quarter of what is likely to be a difficult year for many – not least the commercial property sector.
