Posted on 10/06/2020 14:00:07   by   Richard Knight

Redundant office space vs housing in the post COVID-19 "new normal" era

In a nutshell

The Coronavirus pandemic that's entirely dominated almost every news station all over the world since 2020 began will cause long-lasting effects. As we enter the sixth month of the year and lockdown is finally beginning to ease, much like bleary-eyed animals after hibernating over a long Winter, people are tentatively thinking about preparing for a return to the office.

Of course, this is all assuming you go back to your old office at all. As the Coronavirus takes its toll on the economy and the workforce, some won't have jobs to go back to at all. Many others who are still employed would prefer to work from home permanently, and some employers will choose to downsize their leases or look for flexible office space rather than traditional long-term leases.

In short, if substantially more people are going to work from home and companies no longer require such large office spaces, many industrial estates could stand largely empty. Potentially, this could play a significant role in helping to ease our housing crisis. But what are the arguments?

What does the future hold for people returning to office spaces?

First things first though, let's look at how office spaces may have to change post-coronavirus. If and when you do return to your office, there could well be some surprising differences.

Upon entering, the doors could open automatically so you won't have to touch the handles. There may be compulsory hand-sanitiser in the lift for when people press the buttons. When you reach your floor, you could walk into a room full of dividers and well-spaced desks instead of the crowded open plan layout you're used to. In common areas like meeting rooms and kitchens, expect to see fewer chairs and posted documentation of the last time they were cleaned. The people serving you food may well be in masks and gloves for months to come.

These are just the changes you can see. Less noticeable in the post-coronavirus office would be more frequent cleaning policies, antimicrobial properties woven into fabrics and materials, amped-up ventilation systems, or even the addition of UV lights for more deeply disinfecting the office at night.

This might sound strange and uncomfortable, but it could be a glimpse of the "new normal". It sounds like a modern equivalent of the paranoia which led to the irrational suspicion of others that became prevalent in post-war America.

This is why many people may well look for another way.

Are we moving towards a "WFH" culture?

Bearing in mind some of the changes listed above could involve, companies may find that their employees simply do not want to return to the office once the restrictions are lifted.

If there are any consolations to be taken from the fact that a significant proportion of people in the UK have been working from within their own homes over the last few months, it's that people have realised the specifics of their jobs they wish to change.

For example, few people enjoy their commutes and by working from home (WFH), people often log-on less stressed which leads to increased productivity. What's more, commuting can be extremely costly for some people.

Although initially some VPNs showed signs of creaking at the edges, companies like Zoom, Google and Microsoft offered their tools for free, in the hope that people who start using them in a crisis may carry on once normality returns, and it looks increasingly as if the situation might never go back to how it was. Many employees are already starting to question why they had to go into the office in the first place.

Wasted office space around the UK

It has been claimed that businesses in England and Wales are squandering £10 billion a year on under-used office space. The report by flexible workplace specialist Abintra draws together data from its work with more than 100 corporations worldwide. It claims that in London alone, the cost of under-utilised office space is more than £4 billion annually with large firms in other regions collectively squandering billions more.

The report states that large office-based firms with 250 or more employees in England and Wales are together spending £10,158 million on unnecessary total occupancy costs - that's rent, rates and associated costs of running a workspace and related office functions.

Focussing on London alone, it's reported around 25,000 commercial properties in the capital are currently empty. This accumulated space accounts for 2,700 hectares of land - the equivalent of the London Borough of Lambeth.

If you tie this in with the fact that affordable housing is under huge demand and finding appropriate sites to build it can be an extremely difficult and lengthy process, surely one solution would be to look at office to residential conversion?

What do the statistics say?

The case for office to residential conversion seems overwhelmingly positive when set against the scale of housing needed in England.

It is commonly accepted that England needs about 240,000-245,000 additional homes each year to meet newly arising demand and that nearly one third of the new homes need to be at below market prices and rents.

Additionally, there are about 1.3 million households on local authority waiting lists looking for an affordable home and average house prices in England are ten times average incomes, rising to 16 times in parts of London.

As people cannot afford to buy and there are big waiting lists for housing via local authorities, the demand for renting from private sector landlords has increased. This means that private sector rents are rising ahead of incomes.

It's a problem that won't go away and the argument that a potential solution to ease this problem is sitting redundant all over our biggest cities is tempting.

What's PDR and how does it affect office to residential conversion?

With this proposition in mind, it's important to know that not all changes or improvements to develop or renovate existing buildings need permission from the planning authorities. There are many that can be carried out with implied consent, known as Permitted Development Rights (PDR). These rights enable homeowners and property developers alike to undertake certain types of work without the need to apply for planning permission, which can be a lengthy and litigious process.

Although PD rights are restricted under certain circumstances (if the development project is located in a National Park or Area of Outstanding Natural Beauty, you must maintain the character of the local area), there are many innovative opportunities whereby PDR can bring significant benefits to developers who want to undertake a housing project.

Boardroom to bedroom?

In the UK, both shopping space and professional space (offices) can be converted to residential space under PD regulations as long as the building is structurally capable of being converted without requiring engineering work and appropriate access can be achieved. This change of use is subject to prior approval being sought in respect of:

  • Transport and highways impacts.

  • Noise impact.

  • Contamination risks.

  • Flooding risks.

  • Location or siting.

  • The design or external appearance of the building.

As so many undesirable offices lie deserted generating little or no interest from companies wishing to occupy the space, many town councils have already given the green light to developers to turn them into residential homes.

What's more, due to the proximity of public transport and local amenities to these unused office spaces, they often prove to be more attractive as converted residential spaces, especially in town centres.

Former Communities Secretary Eric Pickles first introduced the more relaxed PDR scheme back in May 2013, before making the deregulations permanent from April 2016, and has previously stated:

"By unshackling developers from a legacy of bureaucratic planning we can help them turn thousands of vacant commercial properties into enough new homes to jump start housing supply."

Since then, these new rules which make it easier to convert offices into residential property have generated tens of thousands of new homes - but is there a downside to the all this?

The counterargument of "office-to-resi"

Although the idea of adapting buildings that are no longer needed to provide an alternative use makes perfect sense, there are critics too. Some say the government's "office-to-resi" scheme gives developers a free pass to create new homes of any type and any quality in any location, as long as the building they use began life as an office.

While it's realistic to assume that not all the homes converted in this way would be ideal, few could have imagined that this policy would produce substandard or unsafe residences, some even without windows.

One reported example was a proposal to convert a small, run-down, two-storey, single aspect office block on a sliver of a site in north Islington, to four flats. This was superseded by a second proposal to double the number to eight. The smallest was 13.7m2 and none of them was larger than 17m2. Each had a tiny shower in one corner and the hob doubled up as a bedside table.

Many others have highlighted similarly shocking examples. The Architects' Journal featured one particular example in Balham recently. Having received Prior Approval to convert a scruffy, two-storey office building on an industrial estate to 13 flats, the developer then decided to push his luck by submitting a new proposal for 26.

There is no outdoor amenity space, the corridor-cum-fire exit is narrow and convoluted, and a number of the flats look impossibly deep and narrow. Three of them sit beneath an industrial skylight, and without a vertical window, they offer no view out.

Yet another example tells of how a Guinean national arrived in London to live in a £1,000-a-month flat in Croydon which had been converted from an office block. Renting one of 54 flats converted after the relaxed PD regulations, she states:

"It's terrible. There is no ventilation and we only have one window that opens. The apartment is very small and I'm not sure it's safe." - Paciencia Obama Bindang

Croydon, known for its ageing office stock has seen thousands of new homes created under the relaxed regulations.

It must be said that not all are of poor quality. One development, Green Dragon House, has won multiple awards. However, at 5 Sydenham Road, the building where Ms Obama Bindang lives, the London Fire Brigade found serious fire safety breaches including a locked fire escape, poor ventilation, and defective fire doors.

Only 14 of the 54 apartments in the block meet space standards and the quality of the interior finish was "extremely poor", including dangling wires. Many of the windows don't open, in keeping with an office building designed to be used with air conditioning, but air conditioning was not available to residents.

Some would argue that things have become so relaxed that Hugh Ellis, interim chief executive of the Town and Country Planning Association, said ministers should reverse course.

"Expanding permitted development was probably the worst housing policy mistake in the post-war era. Left to their own devices, property investors will see opportunities to deliver cheap, profitable developments to low standards.

"We need to bring back minimum standards in design for housing, like rooms with windows, children having some play space, and basic standards of energy efficiency. I would not have thought we would need to campaign for that in the 21st century." - Hugh Ellis

Finding some middle ground

Evidently, the government no doubt had good intentions when relaxing PD regulations, genuinely attempting to address the UK's housing crisis. Plus, hindsight is a wonderful thing.

However, while ignorance may have been an excuse a few years ago, it isn't an excuse now. The government can't continue to ignore the number of substandard residences which are being converted by rogue developers on the cheap.

It's doubtful whether anyone would actually object when redundant offices are turned into good housing. No-one likes to see our precious greenbelt disappear and swathes of empty office buildings are a depressing sight in every town and city.

We are not advocating a reversal of the relaxed PD rules, but that proposals should be subject to the normal, democratic, planning process. If we can simply regulate the procedures using common sense, then good conversions will be approved and bad ones will be rejected, allowing people to live in safety and with the dignity they deserve.