Under new Permitted Development Rights first introduced in England in 2013, certain types of building works can be carried out without the need to apply for planning permission. Since the introduction of this legislation there has naturally been an uptick in the number of office-to-residential conversions taking place throughout the country, but newly published research conducted by CBRE on behalf of the British Council for Offices (BCO) has now cast doubt on the viability of this scheme, at least as it pertains to London.

According to the research some 13.3 million square-feet of London office space could be lost as a result of conversions carried out under the aforementioned legislation, with approximately 7.5 million square-feet of space having already been converted in the city; a further 5.7 million square-feet of conversions have already been given approval.

This equates to an average of 2 million square-feet of London office space being converted each year since the introduction of the legislation (0.7% of total London office stock).

In the past these conversions have been offset by new developments, with office stock in England increasing by an average of 7 million square-feet per year between 2001 and 2015 while conversions to housing maintained an average of 2.6 million square-feet. However the effects of these Permitted Developments Rights have been felt in the time since their introduction; in 2014 for example, an estimated 6,574 homes were created from offices, leading to a loss of 5.3 million square-feet of office space. In 2015 the issue was exaggerated further as 9 million square-feet of office space was converted into 11,155 homes; well above the annual average and approaching double the previous year’s figure.

This widespread loss of office space isn’t unique to London, with cities such as Bristol, Birmingham and Leeds all experiencing high levels of the conversion in recent years, yet London remains by far the worst affected. The capital city receives 36% of all conversion notifications throughout the country and runs at an implementation rate of 57%, compared to a national average of 50%.

The boroughs of outer London seem to be faring even worse in this regard than the inner city, with the worst-affected boroughs of Croydon, Hounslow, and Sutton losing 1.3 million square-feet, 529,500 square-feet, and 492,625 square-feet of office space respectively. On top of that, a further 750,000 square-feet of conversion works have already been granted approval in Croydon alone.

Miles Gibson, UK Head of Research at CBRE, said of the report, “The new Permitted Development Rights have made a significant contribution to housing supply. However, following its introduction we have seen a decline in office stock in England for the first time in over ten years. There is strong evidence to suggest that this decline is due to these new rights, rather than economic or other regulatory factors.

“There are a couple of reasons why London in particular has seen significant take-up. Heavy use of the new rights in the capital may reflect the fact that certain London boroughs, such as Camden and Islington, have traditionally had strong policies protecting office floorspace from conversion. In boroughs which have historically been protective, great losses are less surprising once that protection has been withdrawn.

“London is also where the housing crisis is most acutely felt. Supply shortages in its housing market make conversion of office premises an attractive choice for landowners with the right stock, especially given CBRE’s forecast that UK office capital values in 2017 will fall by -0.2%, compared to a 2% growth in house prices. As such, it seems likely that we will continue to see a growth in conversions in London, as well as the rest of the country.”

Richard Kauntze, Chief Executive of the British Council for Offices, also commented, “There is no denying that more housing is needed in many parts of the UK, and the conversion of some older buildings which are no longer suitable as offices is a sensible solution. However, once office space is lost to residential development, it is often lost for good.

“This loss means that many businesses will not have access to office space of the right quality, in the right location, to succeed and drive growth. London boroughs such as Richmond upon Thames have already expressed grave concerns about the threat of lost office space, as has the Mayor of London. To ensure future economic prosperity, local authorities must take a more active approach to reviewing and approving notifications from developers in order to protect the workplaces needed by local businesses.”

Sam Bonson

Sam is an aspiring novelist with a passion for fantasy and crime thrillers. He is currently working as a content writer, journalist & editor as he continues to expand his horizons.
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