It's Space Jim, but Not as We Need It
Space, the final frontier … or, if you read the election manifestos, ‘residential space’ is just one of the frontiers for skirmishes between the warring political parties … but what about business space?
One party launched its campaign with a (resi) new build target of 300,000 homes, but that was soon eclipsed by the next party citing a figure of 1 million …. What’s this? A late entrant has raised the stakes to 1.5 million!! To politicians this is obviously just a numbers game … but the silence about business space is deafening.
I accept that we need more housing stock in this country and I accept that given the fact that the rewards for building new homes often exceeds that for building offices (in terms of greater capital value and price per sq ft), but we do have a serious dearth of office stock in the regions and, if I am to believe the hustings of every party, none of them have any plan to address this issue – despite the fact that millions of square feet of office space have been lost to new homes.
This is top of my agenda, as we try to find offices for the growing and moving businesses around the country. For example, I was recently talking to a successful professional services firm and despite their desire to move to bigger, greener, more intelligent new offices they could not find anything in their area, at any price. As I drove away from the meeting I reflected on the fact that over the last 15 years, I have witnessed the decline of available business space whilst the resi sector has mushroomed in real terms – forget the continued disappointment of not hitting the 250,000 new homes a year target.
In addition, the 2013 Permitted Development (PD) rights have not helped the business space cause. Not only does ‘Resi Dev’ make far more (financial) sense to all those former speculative office developers who were around when I started in business, but successive governments have prioritised homes over business space, despite lauding business as the great hope for employment, post-Brexit Britain and growing our pre-eminence on the global commercial stage, etc etc etc.
They all lure us with talk of industrial strategy, effective regulation, fairer taxes …. Oh let’s not forget infrastructure investment, doubling innovation and research spending, Yada, Yada, Yada. But my clients and the people I talk to need places where they can do their business. They don’t want to face the stark choice between stay put (in a second-best option), or move to a city centre or business park, an impractical distance from their existing accommodation, customers and employees’ homes and have to pay a premium rent and service charge – I won’t even mention Business Rates!!
But shhhh. Darwinian principles are quietly starting to impact this market.
- In London, office -to-residential (OtR) conversions have ‘collapsed’ by almost 40%
- Some Local Authorities are vetoing OtR schemes – because they would rather cultivate a live-work-eat-shop community, than a dormitory zone for commuters
- Ironically, the new Business Rates listing has resulted in Councils generating more revenue from businesses than from residents paying Council Tax in the same sq ft of space.
My cause (greater support for creating more available business spaces which are fit for purpose and in the right location) might not be a hot election issue, but it is undoubtfully critical to the commercial, economic and financial wellbeing of our nation.
IF I were ever to stand for Parliament, my two big policies would be:
- Build 250,000 new homes a year, until demand was sated – or at least under control
- A National Business Space strategy which would stimulate office development where it is needed to help deliver the country’s post-Brexit ambitions and sustain a national economy capable of meeting the needs of its population of 70m – and growing.