A British Council for Offices report has highlighted the impact office-to-residential conversions are having on the availability of office space – but also the scale of the measure’s contribution to house building output.
The CBRE-written report, commissioned by the BCO, has placed the spotlight on the number of office-to-residential conversions that have taken place following an amendment to the national planning policy framework to allow permitted development rights (PDR) made in May 2013. The government’s temporary measure is due to cease in May 2016.
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The report estimates that between 3,800 and 11,400 homes were created in 2014 as a result of conversions that relied on the PDR.
However, these new homes also resulted in the loss of 3m-9m sq ft of office space, leading to a loss of office stock of all sizes, from units only large enough to create a single new dwelling, all the way up to entire tower blocks comprising hundreds of new dwellings.
Alongside the loss of cheap, secondary-quality office space, the report highlighted several concerns over the PDR conversions.
Local authorities were reportedly concerned about a lack of control over the quality of the new homes provided, including a lack of scope to offset problems associated with a conversion (planning conditions or section 106 agreements).
Councils also complained about their lack of powers to ensure that a conversion contributed to the delivery of affordable housing in the area.
London’s Centre Point is subject to proposals for conversion to 82 flats
The research concludes that the introduction of the offices-to-resi conversion right is “very likely to have had a material impact on key office markets”, and was having “a significant impact on office markets in some parts of London”.
However, the report also makes clear that there is very little publicly available information on the impact of the PDR. As such it recommends a further study after May 2016 to establish what the overall effect of the new right has been.
But it seems that PDR has been good news for contractors, with Construction News reporting that the amendment has caused a “boom in office to residential conversion work”.
Based on data from residential analyst Monitor, the magazine reports that there are currently 89 office-to-residential conversion schemes under construction in London alone. It estimates the value of this work to be £135m.
The rate of office-to-residential conversion applications rose dramatically in April, but has now slowed as the deadline date of next May approaches.
The magazine suggests, seemingly agreeing with the BCO report, that the reduction in office vacancy rates has led to the government delaying its review of the PDR and possibly extending it.
