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Office-to-resi schemes ‘fuelling’ commercial shortages

Planning changes allowing offices to be converted into homes have fuelled shortages of commercial space in London and the South East, according to a new report

The Royal Institution of Chartered Surveyors (RICS) said the change, which applies everywhere except the capital’s Central Activities Zone and a handful of other designated areas, coincided with a nationwide decline in the availability of commercial space that was pushing investors away from prime locations.

Surveyors reported a nationwide rise in the sale of commercial properties with residential conversion rights during the April-July period. At the same time they said the overall availability of commercial property had declined at its fastest rate since its current data-set began 16 years ago.

The RICS said that while respondents in the north felt less affected by the impact of sales of commercial space with conversion rights, almost one-third of surveyors in the south said the effect of the changes on the market was ‘substantial’.

Chief economist Simon Rubinsohn said the rule-relaxation was combining with a broadening economic recovery and putting the office sector under increased pressure.

‘While making a much needed contribution to the substantial shortfall of homes, there are understandable concerns that this could be creating a related problem for businesses looking expand their footprint as economic confidence grows,’ he said.

Alfred Munkenbeck, of architects Munkenbeck + Partners, said the rule-relaxation was a long-overdue recognition that planning rules were too prescriptive on the uses that existing buildings were put to and that price rises reflected the increasing flexibility commercial space offered.

‘Now you can change to residential more easily, office values seem to be going up faster than residential values,’ he said.

‘If there are no compelling reasons otherwise, building owners should be allowed to decide on the use of their buildings - and they’ll decide towards whoever pays them the most.’

Peter Morris, of Peter Morris Archtiects, said that despite the rule-relaxation, some local authorities were still displaying ‘considerable resistance’ to particular schemes.

‘The motive for these developments is clear: residential properties sell and rent for more than offices,’ he said.

‘No one would advocate the complete loss of commercial spaces, but since the birth of the internet the way we work has changed dramatically so it is only reasonable to expect planning policies to change too.

‘Despite all the controversy and potential loss of business spaces, we need to go further.

‘I would prefer to see a single user class and less empty buildings on our high street during the biggest housing shortage we have known since the second world war.

‘Planning and Building regulations need to be more flexible to allow Architects to do what we do best - design clever buildings for working, living and playing according to the need.’

Readers' comments (1)

  • This issue is very close to home for a small practice like ours. We lease offices in London, which the freeholder has plans to convert to apartments but will not say exactly when. It has to be said that some of the ground floor units which were initially designed as commercial space, make awful apartments, particularly those that lead onto the Thames path in Battersea as they is literally no privacy (perhaps the permitted development rights went too far in some instances). There is a shortage of smaller sized office space, i.e. less than 1000sqft but a lot of empty retail space around this size. Permitted development allows retail to be used as office for 3 years, however retail landlords are holding out for retail rents, even though the shops remain empty for years at a time. If the landlords rental expectations could drop then offices such as those required by architectural practices could be part of the solution to bringing life to local high streets.

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