A rise in the number of commercial properties changing hands for conversion to housing is having an adverse impact on the commercial market a recent survey states.
The survey carried out by the Royal Institution of Chartered Surveyors (RICS) in the second quarter of 2014 showed an increase in the number of transactions of commercial properties being sold with Permitted Development Rights (PDR) to be converted into residential properties.
The survey of RICS members showed that a net balance of 49% of respondents said this activity was having a “moderate” impact on commercial market activity, while almost one in five – a net balance of 18% – said it was having a “substantial” impact.
Overall availability of commercial property declined at its fastest rate since the commercial market series began in 1998 with a net balance of 33% more surveyors reporting shortages. There were sharp declines in office and industrial space availability while the lack of supply to the commercial market is pushing investors away from prime location investments and towards “B” grade investments.
The Government has issued Draft Proposals to reform the planning system to allow the change of use of industrial and storage premises to residential use via permitted development. If this change is implemented it could have a further impact on commercial market activity.
Simon McKeag, Partner at ASH & Co says: "The supply of good quality commercial space is already limited in Gloucestershire and until new developments are brought forward, the situation is only likely to worsen.
The permitted change from offices to residential has helped bring vacant properties back into use and there are some industrial premises that would be much better suited to residential; the protection of unviable industrial and commercial space often does not meet occupier’s requirements, so with the correct controls we would welcome this change."