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Boom is over for office-to-flat conversions

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The booming late-1990s market in converting offices to residential use could grind to a halt within a year, according to one of the leading practitioners. Brian Salmon, group planning executive with the Berkeley Group, blamed the decline on improvement in the office market, vat on conversions, and the increasingly onerous social-housing demands from local authorities. 'These factors make the existing value of commercial premises greater than their development value,' he said.

The new approach to social-housing provision is outlined in the latest planning circular (6.98, issued in April) which encourages the provision of social/affordable housing on the site rather than giving the developer the option of making a payment for it to be built elsewhere. Some local authorities ask for up to 25 per cent affordable housing. 'We are then not able to make marketing judgements clear of the needs of social housing,' said Salmon.

One year ago, Salmon calculates, the Berkeley Group had 2300 units of these type of conversions under way. It has fallen severely since then, and he believes it will reach zero by next year. 'The buildings are not coming on the market,' he said. 'In one cause we had bought a building and sold it on because we could get more money for it as a commercial venture.'

Although the Berkeley Group works nationally, conversion of offices to residential is largely a London phenomenon, and so that is where Salmon sees the impact. Conversion of warehouses to residential use is not affected he said, because few of them still have a potential commercial use.

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