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Special report: More than a million square feet of office space has been turned into homes in Bristol since 2013

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Written by: Michael Yong | Posted 04 November 2015 14:09

Special report: More than a million square feet of office space has been turned into homes in Bristol since 2013
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More than one million square feet of office space have been converted into residential property since 2013 – when the Government announced measures to make that change easier.

Commercial buildings were emptied during the recession, with businesses choosing to go remote or going bust.

The temporary permitted development rights (PDR) was introduced in 2013 to allow these vacant offices to be converted into new homes.

But with those rights set to expire in May next year, developers had expressed concerns it could lead to unnecessary red tape when it comes to providing needed new homes.

Last month, Housing and Planning Minister Brandon Lewis announced the rights would become permanent.

Those who already have permission to convert will have three years in which to complete the change of use – ending potential uncertainty for developers and enabling the development of much needed homes.

The scheme has benefited developers in the capital, but outside of London, the highest number of conversions have taken place in Bristol.

Andrew Main, head of western region business development at Savills Bristol, said demand for office space in the city was on the rise, but the large number of conversions meant office stock was falling.

“Around £250 million of office space has changed hands in the last year,” he said. Some of the biggest deals in the country over the last year have taken place here.

“We are also seeing a rise in demand from overseas investors looking for offices in the regions, outside of London. Some of them come from Germany, or further afield, such as Singapore.

“Foreign investment in the regions outside of London is something that wouldn’t have happened 18 months ago. It’s fair to say, outside of London, Manchester is top for foreign investment, but Bristol is on par with cities like Birmingham and Edinburgh.”

It is mostly grade B commercial building stock that is being made into new homes. Grade A commercial estates, such as the recently sold Templeback, below – for £58.5 million – and 66 Queens Square – for £32.7 million – remain as offices.

10 Templeback

With supply dropping and demand increasing, rent prices are also at a premium.

New research from the British Council for Offices showed how changes to the permitted development rights is estimated to have led to more than 6 million sq ft of office space in England in the last year. It meant about 7,600 new homes have been created, although housing supply is still short for an increasing population.

When these permitted development rights were first introduced, the British Council for Offices warned against “a free-for-all”, and expressed fears small businesses might lose out. Local authorities told the BCO grade B commercial stock were mostly selected for conversion, and these were home to small or medium-sized businesses.

And there were worries even if this lost office space was replaced by new commercial development, it was likely to be at the top end of the market, making it unaffordable for many of these smaller businesses.

Richard Kauntze, chief executive of BCO, said: “It is time to take stock and consider the impact of the office-to-residential PDR.

“While the PDR can certainly contribute towards much-needed housing, a cautious approach is required. When, in 2013, the Government consulted on the possibility of allowing the conversion of offices to housing without the need to secure planning permission, the BCO stressed the vital need to avoid a free-for-all.

“This is now more important than ever, as the increase in office-to-residential conversions since the PDR represents a growing challenge in how to satisfy office demand.”

One group in Bristol which will be pleased with the PDR being made permanent is the Abolish Empty Office Building (AEOB) campaign.

The group raised nearly £300,000 from a Community Share Offer, which allowed them to buy their first property in St George’s, Bristol – a commercial property in Battens Lane.

Triodos Bank has also granted a £425,000 mortgage, and building work has now begun.

It will be refitted and extended to create six flats to house 10 people. The first tenants are expected to move into the rented accommodation before the end of next year.

Tony Crofts, AEOB founder, said: “We have clearly struck a chord with those who want to make an ethical investment to support those who do not have accommodation.

“We are delighted to be working with Triodos UK to move this first project onward to completion.”

One of the first prospective tenants, John Cook, said: “It’s nice someone’s not in it for the money.”

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