Farmers seeking new business opportunities to replace EU funding they will lose after Brexit are being urged to examine the potential of any surplus agricultural buildings to provide commercial space.
Industrial and distribution space is presently at an all-time low in many parts of the region, and is significantly lacking in rural locations.
Tim Davies, head of the South West and Wales for commercial property specialist Colliers International, believes the situation offers a potentially lucrative opportunity to farmers seeking to diversify when funding they receive under the European Union’s Common Agricultural Policy (CAP) comes to an end after Brexit.
The Government will maintain current EU CAP subsidy levels until 2022, and then embark upon a transitional period.
Davies said: “Farmers who have large, under-used barns or other agricultural buildings are often in an ideal position to diversify into commercial property, or ‘sheds’ as industrial warehouses are known. The rise of e-commerce has created unprecedented demand in recent years for warehouse and distribution space, and has resulted in a chronic shortage of industrial space in some areas.
“Often farmers have large surplus agricultural buildings on their land, or have space on their land that could accommodate large commercial premises. In both scenarios, subject to planning permission, this can present an opportunity to diversify.
“These assets can be leased out and so will remain in family ownership rather than being sold on, and can be managed on behalf of those farmers who prefer to get on with the running of their farms.”
Davies, who has more than 30 years’ experience in commercial property, said: “This is something that can be done for a comparatively low initial investment compared to other types of diversification, and even with low rents there will be a good return, with yields as high as 10% and even up to 20% in some cases.
“There is also an added dimension in that the extensive roof areas of warehouses can in some cases lend themselves to hosting solar panels, subject to planning permission, thereby augmenting opportunities for new income streams.
He added that the South West and Wales office of Colliers International was expecting to see an increase in enquiries from farmers considering converting agricultural buildings for industrial uses or storage as the date for withdrawal of EU CAP subsidy grew nearer.
Davies continued: “Farms with good access to main roads and motorways will be at a particular advantage for attracting industrial users because of their strategic location, but the shortage of industrial space in some parts of the South West is such that even less accessible sites will attract demand from potential users.
He added that under planning regulations, Class R allows a change in the use of buildings to uses such as B1 Business and B8 Storage and distribution, as well as other use classes. Permitted development rights only allow for change of use so a planning application would be required for building works.