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The change in permitted development rights that now allows landlords to convert office space to residential space was implemented in order to ease the housing crisis in London. However, an unpredicted consequence of the amendment has been an increasing shortage of offices. Companies suffering the most from this lack of office space are small business and start-ups that need flexible terms, smaller floor plans, and are often located in fringe areas due to lower rent and rates.
The huge reduction in available offices caused by residential conversions has made it almost impossible for new companies to occupy space without agreeing to a year’s rental deposit and historically high rent prices.
Eugene O’Sullivan, Morgan Pryce’s Managing Director and chartered commercial surveyor, says that: “Developers have noted the demand for office space and we expect an injection of new offices in 2017; this should help bring the market back to an equilibrium between office supply and tenant demands.”
Mayor Sadiq Khan is now addressing this problem by modifying permitted development rights to include protection for small businesses. His proposal needs some additional detail before it can be implemented, but it shows that the office shortage is now being addressed.
This news was brought to you by Morgan Pryce, a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.