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Covid-19’s impact on future commercial property requirements

By Dan Teuton
27 July 2020

While it’s hard to imagine a post Covid-19 world, it is easy to understand its effect on how organisations may view the requirement for commercial property in the future. Quite simply business models are changing, high streets are disappearing, and IT is and will continue to play a far greater role in how an organisation’s workforce goes about its day-to-day business, writes Miles Eckersley, partner, IBB Law.

The space we previously occupied is perhaps no longer required in such quantity. The need for the daily commute has and will diminish over time and be replaced in whole, or in part, by those agile working techniques we have all come to adopt over the past few months. With these thoughts in mind, where does this leave landlords and tenants alike and their requirement and use of commercial property? Why should organisations subject themselves to such high business rates and rents and other large overheads when business can be conducted effectively and efficiently in a remote setting with the right equipment, the right support and the right guidance?

So, what is to happen to those thousands of square feet of unused commercial space in the future? This does depend, in many cases, on their existing use, classes and indeed other factors, but new proposals announced last year, to allow commercial buildings to be demolished and built as residential homes, are due to come into effect through the Planning in Principle Scheme. This is to sit alongside the existing (and to be reformed) permitted development rights (PDR), which requires a Prior Approval submission, but no reference to planning policies should the correct steps be taken in its application.

Even with these provisions, is the process of converting commercial property to residential use that straight forward in practice? Local authorities still can reject PDR and Prior Approval by election to an Article 4 Direction, meaning a formal planning application would be a requirement for any conversion proposal. There are also the numerous other factors to be considered, as not every commercial property is suitable for conversion into residential use. Can for example, the conversion sustain suitable room sizes, is there sufficient light, and what about outside space (which has become so topical during the current lockdown measures), how would the proposed conversion affect the surrounding area, are there sufficient transport links and community space available? The list of considerations is lengthy.

Any decision to convert a commercial property into residential accommodation requires careful consideration of the numerous factors affecting a local authority’s decision in its approval process. It is extremely important that any owner of commercial property considering this course of action should consult an expert as early on in the project as possible.

Miles Eckersley

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