Breathing new life into old offices: More commercial sites may be converted into low-cost housing. Nicholas Faith reports

Nicholas Faith
Monday 17 August 1992 23:02

FOR once a ministerial plea looks like being answered - albeit not by the audience intended by the minister. Earlier this month John Redwood, the inner cities minister, urged Urban Development Corporations to step up sales of land for low-cost housing. He believes that UDCs, like private developers, are holding back land in the hope of cashing in on an improved market for offices when the recovery comes.

Mr Redwood obviously did not dare state the obvious: that there are hundreds of sites in inner cities which are either derelict or covered with offices, warehouses or factories, and which are highly unlikely to be occupied in the foreseeable future.

But in London at least, sheer financial pressure is inducing private landlords to try to cut their losses by converting offices (or sites for offices) into low-cost housing, or hostel accommodation for the capital's hundreds of thousands of students.

The computerised database kept by Geoff Marsh of Applied Property Research (APR) shows at least a dozen such schemes in various stages of development, and, for the first time, he is seeing a steady flow of developers seeking advice on the planning procedures involved. In addition, as he says, 'a lot of these newcomers are fully funded. They're guys who got out before the boom burst and now have cash to play with . . .

'I was laughed off stage when I first propounded the idea a couple of years ago to a conference of surveyors but now these guys represent the next wave of developers. Moreover, there's a lot of interest among housing associations and college bursars looking for student accommodation.'

Mr Marsh believes that the dramatic decline in demand for offices 'should be seen as a rare opportunity to develop private-sector housing in central London on a grand scale, for people wanting to live within a pounds 5 taxi ride when they come home late at night. There's a similar opportunity in a number of large provincial cities like Manchester. The only difference is that outside London the opportunity lies in those sites that it is simply not worth developing, rather than in unoccupied offices.'

The number of sites and offices available has been multiplied by the depth of the recession and the vast increase in supply engendered by planning law changes in the early 1980s. This ensured that sites previously reserved for 'light industrial use' - warehouses and small factories - could be used for offices.

This led to a vast and generally unprofitable expansion of schemes in the inner ring of boroughs around the City of London - most noticeably Camden, Islington, Southwark and Hackney. Indeed the schemes now being put forward for conversion range from a former joinery factory in West Hampstead to a former car showroom in Hammersmith.

The flow is likely to increase. According to Mr Marsh's calculations, 'only a quarter of the 1,700 projected development sites in central London with planning permission are likely to be built on in the next 20 years'. For many of these are 'back land, garages and builders' yards in primarily residential areas where greedy developers had hoped to build. At the moment their value relates to their use for car parking or poster sites.'

Mr Marsh is reinforced in his beliefs by a survey conducted in Islington by a team from APR. They examined in detail 181 undeveloped sites with planning permission for offices in the borough, grading them for such factors as location, quality of environment, distance from public transport and even the area's safety.

They found that none of them were likely to be developable within the next five years and that only a quarter were intrinsically good enough to be developed within the next decade, even if the market returned to its historic 'balance' - an unlikely supposition, not only in Mr Marsh's eyes, but also in those of many other observers. The majority of the sites were thought to have 'not a lot of hope as an office site', while a fifth 'will never be a good office site'.

This provided Mr Marsh with further evidence for his revolutionary idea that, given the endemic imbalance between supply and demand for offices, it is increasingly profitable (or, rather, less unprofitable) to use premises for residential rather than office use. Even existing offices are not safe since the level of rents in the inner ring can be down to pounds 5 per square foot, at which point it becomes more profitable to convert the offices to housing, or pull them down and start again.

Nevertheless, even the most fortress-like buildings are not necessarily unconvertible - as is shown by the former warehouses now transformed into trendy flats in Wapping and Bermondsey. An office block on Clerkenwell Road in London that is now being converted for housing was abandoned when it was an open shell.

The new developers had the choice of pulling it down or accepting the fact that the new flats/hostel would have floors designed for office use, which makes them much stronger than required for housing. But so much had been spent on the foundations and floors that it seemed absurd to spend more demolishing it.

Although developers (and their bankers) are naturally unwilling to admit defeat, the biggest obstacle to the sea change could prove to be the attitude of left-wing councils, even though they claim to be in favour of affordable housing.

When it was proposed to transform a newly built office block in trendy Canonbury into student housing local residents made such a fuss that Islington Council was pressurised into refusing permission.

The planning jury is still out on the most ambitious and imaginative office-into-housing scheme proposed so far. It is located just south of the Thames, half a mile west of London Bridge. At the moment it has an appalling reputation: a deserted dead-end street that has been the site of a couple of particularly nasty murders. Originally the developer, Surrinder Taneja, tried to let offices on the site. But he has now put up the idea of providing 800 bedrooms for students, especially from Guy's Hospital nearby, not in the form of a hostel, but as flats for three or four students who would have individual bedrooms.

Mr Taneja reckons that the scheme could save the area, with the students providing policing simply by being present in large numbers in the evenings. But the idea could run up against Southwark Council's policy of preferring offices to houses - even when they are unlikely ever to be occupied, and when the real choice is between continuing dereliction and the provision of much-needed student housing.

(Photograph omitted)

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