COMMERCIAL
Office space lends itself to conversion to apartments, and it’s family houses that we need.’
For instance, a half an acre might have an industrial value of £150,000 to £200,000. A high density residential development could create as many as 30 flats on that space, which would have generated £800,000 to £1m at pre-crunch prices, and probably a bit short of that now. Guy Passey points out that commercial
to residential is already a well trodden path. “The trend has already gained momentum over the past couple of years,” he says, “and EA Shaw has been successful in helping developers convert offices that they can’t let. Some of our commercial clients who have never thought about residential before are now looking at it quite seriously.” For example, at Bull Inn Court, Covent
Garden, former office space was converted into 14 residential units, all of which were sold off plan. At 16 Stukeley Street, an adult educational college was converted into ten apartments, unusually, half for rent and half for sale.
A sad building in East London, once a knitwear factory, maybe soon to be
stunning homes.
THE CONCERNS So if conversion from commercial to residential space is already possible, why bother with the change of regulations? Guy Passey says one reason is that
different councils have very different policies on change of use. Westminster, for instance, tends to favour commercial to residential conversions, while Camden sees them as less desirable, which makes the planning process in that borough more difficult and lengthier. So far, conversions have tended to cluster in the ‘easier’ boroughs; a change in legislation would make development more even across the capital. But most conversions would require
In central London you could look at £650 a square foot value –
£1250 for residential.’ GUY PASSEY EA SHAW
changes to the exterior of the building, which would require planning permission even if change of use were permitted. Peter Bolton King of the NAEA says that the devil is in the detail; external works such as shop fronts and fascias, for instance. Philip Stewardson’s experience has been that new windows are often needed, again requiring permission. He is also skeptical about developing
flats above shops; though they sound like a good idea, the fact is that it’s nearly impossible for individuals to source
mortgage finance on them. “Where we develop this type, it’s purely as an investment” for rental income, he says. Another concern is that office space
generally lends itself to conversion to apartments, not houses. The market for apartments is fairly well supplied (in 2008- 9, half the total housing supply was in the form of 1 and 2 bedroom flats, according to Policy Exchange), while it’s single family houses which form the biggest area of shortage. And Philip Stewardson says the apartment market is dead - “Our lender is telling us that no one will be funding apartment schemes for the next five years, except in London.” He believes a much more radical
approach needs to be taken to the definition of land for employment use. For instance, the Austin Rover site in Birmingham is currently defined as for employment use, but he says “Many years after the car factory closed, the vast majority of the site remains unused. I’d be surprised if 5 percent of it is occupied, I drive past it quite regularly. Policy dictates that it’s land for employment use, but businesses now simply don’t employ 10,000 people or need that kind of space.” Redeveloping it for housing, in his view,
PROPERTYdrum APRIL 2012 33
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