Significant changes to the laws of a game help to level the playing field of experience, shake-up the status quo, provide a platform for ingenuity and an opportunity for new entrants.
The advent of T20 cricket almost 20 years ago is an example of how a substantial regulation change, that was much maligned at the time, has hugely impacted the sport of cricket. Designed to draw in a new audience, many traditionalists turned up their noses and saw it as a fad that would not last. Others saw this as their opportunity to break the established mould and make their riches – they didn’t want to get left behind. The fundamentals of the game evolved quickly, skills greatly improved and became transferable, judgement of risk changed and appetite for it grew and huge value was generated.
The 2013 Office to Residential Permitted Development Rights was a notable policy change brought in to tackle the chronic housing shortage. It created new homes, enhanced the saleability of assets, attracted an influx of first-time developers and ultimately made the assets worth more.
Could the autumn 2020 revision of the Planning Use Class Order be a similar T20 moment? The flexibility afforded within the new Class E ‘Commercial, Business & Service’ and Sui Generis use classes should provide a platform for the established players to continue to exhibit their skill whilst giving an opportunity for the risk-takers and the pioneers to show their hand. Both may find success either independently or through Joint Ventures with existing landlords or Local Councils.
Revision of Permitted Development rights from 1st August 2021 allowing conversion of assets in Class E to Residential will further broaden flexibility and provide even more of a blank canvas from which to generate value both for the stakeholders and also for the community through the re-invigoration and re-investment in the hearts of town and city centres.
We see our market already factoring these changes into pricing for certain assets, particularly large vacant retail units and shopping centres, and it will take just one or two notable projects for players to decide the time (and pricing) is right to enter the stage – perhaps one on which they have previously performed albeit in a different guise. Conversion to residential may not necessarily always be the solution; the successful will think more laterally and utilise the flexibility afforded within the new use classes in order to generate income and derive value.
Commercial property is a multi-tiered asset class full of a wide variety of players from the slow and steady accumulators through to the innovators –Boycott vs Botham, if you will. There need not be complete harmony between the two but there should be an appreciation of the mutual benefits each can bring; after all Ben Stokes salvaged the Headingley Ashes Test Match using the skills he honed through T20.
If you are thinking about selling a commercial property at one of our forthcoming auctions, or would simply like some advice, please do not hesitate to contact Will firstname.lastname@example.org or +44 (0)7500 949587
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