Could You Live at the Office?
New plans designed to allow easier conversions from office space to homes could create the ‘erosion’ of city business districts.
Last week we heard from Steve Baker of serviced office company Ventia Ltd, who aired his views on the current trend of converting office space into residential housing. According to Steve, it’s a growing trend that saw applications accelerate by 53% in 2011 – particularly in London, which is driven by the sky-high prices for residential property.
With much of the conversions focusing on period buildings and smaller properties that are popular with start-ups and SMEs, there is concern that this will limit the choice of office space for smaller businesses, particularly in the West End and high-value locations such as St James and Mayfair. Steve believes that this will “change the dynamics of the West End” and force businesses to locate elsewhere in Central London.
Now according to Ed Hammond and Jim Pickard from the Financial Times, the government could be about to push through nationwide changes to the planning system to allow easier conversions of offices to homes.
With widespread shortages in housing, the change is intended to encourage home-building projects in regional cities and towns outside of London. But it seems that property developers have their sights set firmly on the cash value of certain locations rather than the actual need, as much of the office redevelopments appear to be focusing on the one UK area that needs it the least: London.
Given the lack of demand and drop in office space values across certain parts of London, the appeal is that developers can add significant value to a building or a site by snapping it up at low cost, and securing permission to change its use.
But this comes with its own problems. Some areas in Central London are exempt from residential development such as The City, in favour of retaining its reputation of a ‘business district’ and, in the case of the Square Mile, a global financial hub. But other areas of London do not have such exemptions and experts warn that they could soon be at risk of over-supply of residential property, and a mirrored shortage of office space.
In addition, any towns and cities that accept a high level of office-to-home developments could find their business districts becoming “eroded”.
And of the larger high-rise properties that were designed specifically for office space? Ventia’s Steve Baker warns that this is next on the agenda, as the projected financial returns are “compelling”.
So as long as residential rents and prices continue to rise, experts believe that we can expect to see this trend continue. However, officebroker.com reports that the serviced office sector has remained resilient, so in line with a growth in residential conversions we may also see a significant rise in the number of business centres appearing in Central London and other key cities such as Leeds and Manchester.
Either way, as the appeal of ‘city living’ grows and the rate of office-to-home conversions increase, perhaps one day you’ll find yourself moving into an office, settling down for dinner in the boardroom and brushing your teeth in the reception. It certainly gives new meaning to the concept of ‘work-life’ balance.