UK: The London Office Crane Survey – Is The Planning System Working To Supply Office Buildings?

On reading this summer's Deloitte Real Estate Crane Survey, I began to wonder whether the planning system is doing its bit to maintain the supply of new offices. 

It struck me that many of the largest buildings under construction in Central London have taken up to 10 years to go from grant of planning permission to practical completion. For example, the Cheesegrater and Walkie Talkie were approved in 2004 and 2007 respectively. Equally, I secured the permission for Walbrook Square in 2007 – redevelopment of the largest site in the City will finally be completed as Bloomberg Place in 2016.  It is also easy to forget that Kings Cross was originally granted outline permission in 2006. Who knows when the Pinnacle will be built (approved in 2006)?

With this anecdotal evidence in mind, it wouldn't appear that the planning system can act as a quick fix to solving the supply side, particularly through the development of large buildings. 

I was therefore encouraged to see that Deloitte's research into the development pipeline identifies that there is about 15 million sq. ft. of office floorspace in Central London which has planning permission or is currently going through the planning system, but where construction hasn't started. 

Should investors start construction of this space fairly promptly, this level of supply will go a long way to meeting demand over the next 5 years. It could also help to mitigate concerns that too much office space is being converted to residential. 

An interesting debate at the forthcoming London Plan EIP will consider the Mayor's proposed alteration to Policy 4.3 that developers changing the use from office to residential may have to make a proportionate contribution to new office space within or nearby the development. This policy has been opposed by the development industry due to the potential adverse effect of another burden on schemes' viability and because it could reduce the ability to provide much needed housing, particularly through redeveloping poor quality office stock. 

While the GLA and Central London boroughs were successful in getting an exemption from the permitted development right to change from office to residential, it may be more of a battle to introduce this policy.

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