Managing old stock

Draft legislation states that all commercial properties must achieve a minimum EPC rating of B from 2030 unless regulatory exemptions are granted, although full details are yet to be confirmed. The new London Plan document notes that over 1 million sq m of office stock currently fails to meet these requirements. Whilst it acknowledges that this stock is critical for London’s competitiveness - and that there is a pressing need to upgrade or repurpose commercial premises – it doesn’t offer solutions.

Permitted development rights (PDR) have helped to eliminate a proportion of London’s obsolete office stock located in non-prime locations by converting it into much needed housing. And Savills is involved with a number of retrofit projects to convert old offices into sustainable Grade A premises.  However, the viability challenges and planning policy barriers to repurposing London’s obsolete office stock are significant.

Local authorities have introduced wide-ranging Article 4 directions to ostensibly safeguard its office stock but which often end up stifling investment and preserving obsolete premises. And London-wide office planning policies are implemented in a manner that restricts changes of use. Whilst prime offices with large floorplates should be safeguarded, the policy framework poses considerable challenges to the owners of old, poorly located office stock on constrained sites. Applicants seeking a change of use are typically required to provide several years of marketing evidence and to test configurations that are unrealistic and unviable for affordable workspace.

We would like the new London Plan to provide clear guidelines that enable developers and planners to assess when an obsolete building is no longer fit for purpose and can be justifiably demolished. Savills has worked with the London Property Alliance to draft guidelines for a national framework which could be applied in London. It enables consideration of environmental, social and economic sustainability issues as part of the planning balance. 

A lack of clarity

Towards a London Plan cites national policy which introduced the E Use Class and which provides a degree of flexibility for offices and other activities. It aspires to introduce a greater variety in town centre activity, but the E Use Class doesn’t include residential uses or hotels -  often the most appropriate redevelopment scenarios -.and there is no clear steer on the policy direction for making town centres more diverse.

With regard to affordable workspace, the document suggests there is the potential to accept payments in lieu and consolidating provision in a single location. It also suggests that it could set affordable workspace standards across London. Whilst such standardisation could provide greater clarity, the policy’s impact on viability needs to be appreciated. If too onerous, schemes will simply not be progressed.

The document’s approach to business and industry clusters would also limit flexibility. Whilst it is right to seek ways to support important growth sectors, the consideration of area-based sector designations could deter investment from other industry sectors and cause stagnation as the document suggests. This should be reconsidered.

We hope that as it evolves, the new London Plan will be more ambitious about removing the barriers to site redevelopment by allowing greater flexibility of use and loosening the requirements for affordable workspace.

Further information

Contact Dave Wasserberg or Dan Jestico