Conversions to housing driving office shortage

DEVELOPERS converting commercial property into private homes are helping to drive the sharpest decline in availability of non-residential buildings in at least 16 years.

According to figures released today by the Royal Institution of Chartered Surveyors (RICS), there has been a rapid drop in the number of avail­able commercial properties across the UK.

A third more surveyors are reporting shortages than not, the highest majority in the survey’s history, dating back to 1998.

Across the country, more than two thirds of respondents now say that the conversion of commercial units into residential property is either moderately or substantially weighing against availability.

In London, the proportion is much higher, pushing above 80 per cent. Less than 15 per cent of surveyors in the capital think the trend is having no effect in their patch, in comparison to nearly 50 per cent in the north of England.

“The pressure in the office sector is being exacerbated particularly in pop­ular locations by the gradual conversion of some secondary space into residential,” said Simon Rubinsohn, chief economist at RICS.

“While making a much needed contribution to the substantial shortfall of homes, there are understandable concerns that this could be creating a related problem for businesses looking expand their footprint as ec­on­omic confidence grows,” Rubin­sohn added.

The respondents are also expecting the increasing shortages to translate into higher rents this year, outstripping consumer price inflation in every part of commercial property.

When the sector is broken down, surveyors are expecting a 2.8 per cent increase in retail rents, a 4.3 per cent boost for office space and a 5.5 per cent increase in industrial rents.