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This government scheme is designed to tackle the under supply of housing in Britain. Essentially under new planning regulations converting B1 office spaces into residential units without the previous requirement of obtaining special change of use permission. Previously it was mandatory to obtain such planning permission, which was a long and time consuming process that had no guarantee of approval.
The most iconic office space in London being converted under this scheme is Centre Point, located on top of Tottenham Court Road station. This tower of the West End is currently 95% office space and is to be turned into 82 flats.
However, nearly 50% of the London Boroughs have either in full or in part decided to opt out of the new scheme due to fears that it will have a negative effect on local employment and new job opportunities. There is also speculation that the new scheme could spark a reckless free for all allowing developers to cash in having a detrimental effect on local economies.
Over the last year the West End office market has become extremely tight with a limited supply of office space available at any one time. Naturally, this has created a landlords market, with the equilibrium between supply and demand shifting, seeing rents steadily rising and rent free periods being squeezed.
One of the main reasons for this can be put down to the office to residential conversion scheme. Landlords are holding off bringing there spaces to the market for office occupiers in the hope that they will be able to take advantage of the new scheme and change the planning use to residential. The reason for this is that high demand for residential units in Central London means that values are far higher for residential space rather than for an office.
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. View other articles by Morgan Pryce