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Comment: ‘Offices are crucial to the economy so don’t rush to convert to homes’

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The City needs an opt-out to stop residential developers diluting business offer, says British Council for Offices chief executive Richard Kauntze

The Government’s plan to make it easier for developers to convert offices into houses is not without merit (‘Government announces offices to residential permitted development rights’, AJ online 24.01.13) but a judicious balance must be struck to reflect regional economic conditions.

Despite the global downturn, London is still the leading financial centre. Reflecting this, its office sector is on a different level from the rest of the UK, with a surging demand for offices resulting in £14 billion of investment into the capital’s commercial property market during 2012. Having an opt-out from conversion clause in place in the City is vital as a catalyst for an economic revival.

But the office sector outside of London also has its hot spots and areas of potential that need to be protected and invested in.

Research released last year by the Centre for Cities, supported by the British Council for Offices (BCO), highlighted the nuanced picture of the UK’s office sector, revealing a mismatch between where offices are needed and where they are actually being built.

For instance, with demand outstripping supply, cities such as Cambridge and Reading witnessed office rents rocketing 50 per cent above the national average. Local authorities in these regional economies may also need to exercise the option to opt out so that they can protect and support their office-based business communities.

We accept the logic of converting redundant offices into housing to help stimulate the construction sector and address the housing shortage. Indeed, in a report on office obsolescence (June 2012) we found that many older office buildings with poor accessibility in rural or suburban locations face the entirely negative prospect of demolition without change of use.

But we are also firmly against the ushering-in of a conversion free-for-all, which could do serious damage to the UK’s 77 per cent service sector-dominated economy if there is not enough office space for businesses to cater for economic expansion.

With GDP dipping by 0.3 per cent in Q4 2012, we are far from being out of the woods, and the need for investment in high-quality office new build and refurbishment should not be underestimated.

For city centres in particular, modern office buildings are crucial to the economic mix.

Converting offices into homes will pose numerous design challenges for residential developers. How many will be economically viable in less prosperous areas remains to be seen.

Issues that would require attention could include the appropriateness of the structural frame, acoustic separation, access to daylight, overlooking issues, vertical circulation and local transportation needs, to name but a few.

Furthermore, the wider context of place needs to be considered in the context of local facilities; does the area have the necessary retail, education, healthcare and public open space requirements to support the change of use? Without the necessary S106 agreements in place, how are these to be bought forward?

Despite the rise of flexible and remote working, the office will undoubtedly remain a central working hub, providing more than just a space to work but a place to socially interact. As such, we need to continue to invest in these workspaces to meet evolving demands.

But, where office vacancy rates are high, it is hard to dispute that the conversion to residential is a more attractive option than the wrecking ball.


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Readers' comments (1)

  • John Kellett

    One aspect that appears to be missing from most commentaries on the issue of converting office buildings to homes is that many offices are in buildings designed for another purpose anyway. Houses, warehouses and agricultural buildings have all been converted to offices in the past. For those buildings, for which 'office' is now no longer a viable use, the Government 'initiative' is very good news.

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