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Finanze Daily Digest - 21/11/2021

The Brief: England’s office space stock is contracting at its fastest rate in 20 years, according to Boodle Hartfield. Workspace supply fell 2% in the year to the end of March. The law firm attributes the decline of almost 20 million sq ft of office space to the increase in hybrid working models and the slowdown in construction activity.

Why It Matters: Workplace flexibility during the pandemic has greatly contributed to the decline in demand for offices across the country. In a separate report, Boodle Hartfield states that number of office buildings approved for conversion to residential housing surged 24% in 2021 from a year ago.

Finanze Foresights: The revised Permitted Development Rights (PDR) from August 2021 allowed the conversion of commercial, business and service buildings (Class E) into C3 residential properties without planning permission as long as the project meets several conditions. This has been supported by many in response to the growing housing shortage in the country, and is deemed socially responsible since many buildings, especially retail centres, had their occupancy rates plunge deeply during the peak of the pandemic. In addition, a 2021 study on the impact of planning policies in the UK concluded that London buildings that were qualified for automatic rights for office-to-residential conversion experienced a significant rise in value compared to those that were not. But these conversions have met resistance at the same time. While the pandemic has brought building repurposing to a new high, putting them into practical use became controversial in the past years as some groups claim that residential units are made with substandard materials that make them unfit for habitation, and local governments have had to spend more on public security, educational facilities and social services to cater to growing communities. In early November, council members in Norwich City sought city officials to change the planning process since the city may lose its status as an economic hub if more offices are converted into flats. In this case, we are reminded of the importance of sustainable urban planning on economic growth that balances the need for housing and the development of an area.


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