21 Sep 2017


There is a shortage of new homes. The government targets over 260,000 per year in England but the industry has delivered 189,000. Meanwhile, the image of offices sitting empty while there is this undisputed housing need seems like a failure of economics; the planning system has prevented market forces from determining the optimum land use.




Under the prior approval regime established in 2013, there is consent in principle for office to residential conversion. Local authorities can either examine notifications or wave them through. Authorities can nominate areas for exemption and have until 2019 to do this.

In March 2016 the rights became permanent. One year on from this permanence the BCO were intrigued to see what impacts there had been and commissioned CBRE to revisit its 2015 research.The number of notifications has been declining gradually. 

We think this is because much of the “low hanging fruit” has already been identified. Nevertheless, notifications are running at 750 per quarter. Local authorities are examining more, but there is no consistency in approach.Almost 13,000 homes were created in 2015-2016 through PDR following 6,600 in 2014. This is a meaningful proportion and equivalent to the output of a couple of good sized house builders. 

We estimate 18 million sq ft of office stock has now been lost since 2013 with the conversion rate running 5 times greater than before 2013. English office stock has fallen since PDR was introduced. In London specifically, 7.5million sq ft has been converted with a further 5.8 million sq ft expected; 5% of Greater London stock.

For office investors PDR has provided optionality and can mitigate obsolescence risks. However, there are reasons for caution. Some local authorities are concerned about what PDR has done to local environments and its piecemeal nature has frustrated consistency in top down planning policy. It is reducing the Grade B and C options on which the SME economy relies. 


We cannot prove empirically resultant harm, but anecdotes have been persuasive. Finally, a bigger office workforce is now being accommodated in less office stock. An unforeseen consequence of PDR is increased office utilisation.


Access the BCO research page and download the report to find out more on PDR.      
Blog post by Bill Page, Chairman of the BCO Research Committee.           

15 Sep 2017

Launch of new report ‘Permitted Development Rights: One year on from permanence’


A year on from Permitted Development Rights (PDR) becoming permanent, the BCO commissioned a new study to establish the impact on the office market and the extent to which the regime is contributing to the conversion of offices to residential. The report was commissioned by the BCO and carried out by property consultants CBRE.

A total of 13.3 million ft² of London office space could be lost to office-to-residential conversions carried out under new Permitted Development Rights introduced in 2013, according to the research.

This figure comprises of 7.5 million ft² of office space in London which has already been converted to homes since the introduction of the rights, with a further 5.7 million ft² of conversions in the capital having approval. An average of 2 million ft²/year has been converted each year since the rights were introduced in 2013, or 0.7% of the total London office stock.

The office development market has historically been able to outrun losses from conversion. Between 2001 and 2015, office stock in England has increased by an average of 7 million ft²/year, while conversions to housing have averaged 2.6 million ft²/year. However, in 2014, an estimated 6,574 homes were created from offices, leading to a loss of 5.3m ft² of office space. The creation of 11,155 homes from offices resulted in a 9m ft² loss of office space in 2015, almost double the figure from the previous year. 

The report finds that while Bristol, Birmingham and Leeds have all experienced high levels of notifications to local councils, London remains the city most affected, with 36% of all notifications in the capital. Furthermore, a higher proportion of these have been converted compared to the rest of England - London’s implementation rate is running at 57%, compared to an estimated national average of 50%.

Boroughs in outer London have been the most affected. Croydon has seen the most significant loss of office space so far, with estimates indicating that more than 1.3 million ft² over the last 4 years has been converted. A further 750,000 ft² of developments granted prior approval have not yet been converted. Hounslow and Sutton have also been significantly affected, with an estimated 529,500 ft² and 492,625 ft² of office stock lost to conversions to date.

In this podcast, Bill Page, chair of the British Council for Offices Research committee, explains the key findings from its latest report into office to residential conversions. 

Miles Gibson, Head of Research at CBRE UK commented on the findings:

“The new Permitted Development Rights have made a significant contribution to housing supply. However, following its introduction we have seen a decline in office stock in England for the first time in over ten years. There is strong evidence to suggest that this decline is due to these new rights, rather than economic or other regulatory factors.

“There are a couple of reasons why London in particular has seen significant take-up. Heavy use of the new rights in the capital may reflect the fact that certain London boroughs, such as C

amden and Islington, have traditionally had strong policies protecting office floorspace from conversion. In boroughs which have historically been protective, great losses are less surprising once that protection has been withdrawn.

“London is also where the housing crisis is most acutely felt. Supply shortages in its housing market make conversion of office premises an attractive choice for landowners with the right stock, especially given CBRE’s forecast that UK office capital values in 2017 will fall by -0.2%, compared to a 2% growth in house prices. As such, it seems likely that we will continue to see a growth in conversions in London, as well as the rest of the country.”

Richard Kauntze, Chief Executive of the British Council for Offices, added:

“There is no denying that more housing is needed in many parts of the UK, and the conversion of some older buildings which are no longer suitable as offices is a sensible solution. However, once office space is lost to residential development, it is often lost for good.

“This loss means that many businesses will not have access to office space of the right quality, in the right location, to succeed and drive growth. London boroughs such as Richmond upon Thames have already expressed grave concerns about the threat of lost office space, as has the Mayor of London.

“To ensure future economic prosperity, local authorities must take a more active approach to reviewing and approving notifications from developers in order to protect the workplaces needed by local businesses.”
















For more on PDR download the report here which is free to BCO members.


Press:
Nicola Plumley or Jenni Edwards
British Council for Offices / Blue Rubicon
T +44 (0)20 7260 2700
bco@bluerubicon.com

11 Sep 2017

'The office of 2035: what it will look like, and how it will support the way we will work’. The BCO NextGen Competition


Competitors are asked to consider ‘the office of 2035: what it will look like, and how it will support the way we will work’.  The free-to-enter competition is seeking forward-thinking and innovative responses, challenging the conventionalities of today’s workplaces and anticipating future needs.
The NextGen programme allows the BCO to mentor the next generation of professionals – designers, agents, developers, consultants and others – and provides a platform for emerging talent to share their ideas.
With social, economic, cultural and technological progress changing the way people work, employers and workers’ expectations are in flux.  Ubiquitous and instantaneous technology; a growing interest in health and wellbeing; a greater desire for organisational flexibility; and an increased awareness of individual’s needs are now all competing factors within the workplace.
Multi-disciplinary teams of between two and four members are invited to enter the competition. Individuals are also encouraged to register, and will receive the support of the BCO to form teams. Each team must contain a minimum number of BCO members – full details available on the BCO NextGen website.   
Competitors will need to submit a 15-20 page report, including at least 10 images, graphics and diagrams and with additional media (including a five minute video) encouraged. The deadline for entry to the competition is Friday 6 October 2017.
During the competition period, teams will be invited to participate in ‘hackathons’ led by senior industry figures, and will be offered the opportunity to receive one-on-one mentoring and advice from an expert in a relevant field. A number of regional launch events are planned for the coming weeks, to promote the competition to young professionals throughout the UK.
Entries will be judged by an expert panel drawn from a range of disciplines and including David Hamilton.  The winning and highly commended teams will be announced at the BCO NextGen Awards Dinner on Wednesday 15 November.
The competition’s first prize is an invitation for the winning team to attend the 2018 BCO Conference in Berlin, including tickets to all conference events, flights from the UK only, hotel accommodation, and a financial contribution towards transfers and subsistence. The runner-up team will receive an invitation to an exclusive private dinner hosted by two key industry figures.
For full details of the competition, including team and submission requirements and the detailed brief, please visit the BCO NextGen competition website at http://bconextgen.co.uk/competition/. We have started revealing more details of mentors and judging panel. 

30 Aug 2017

Bristol businesses, cyclists need you!


Mark Alker Stone, chairman of the BCO South West of England, Thames Valley and South Wales, calls on Bristol office owners to do more to encourage cycling. The recent BCO report 'The Market Cycles' revealed 38 per cent of office workers would consider commuting by bike if their workplace offered better facilities. This report considers the impact of growth in cycling on office specification as well as occupier and investor demand.

Back in 2015, Bristol’s then-mayor unveiled plans to double the number of bike users in the city over 10 years.

The BCO report highlights the need for better cycling facilities at the city’s workplaces and office buildings if such ambitious targets are to be met.

Currently one in ten adults in Bristol cycle at least three times a week and 47 per cent of these are commuting journeys. Bristol Cycling Campaign wants 20 per cent of all Bristol commuting journeys to be by bike by 2020. Bristol’s businesses need to start helping more.

Improved parking facilities could help, with 16 per cent of workers surveyed saying better bike storage would encourage them to cycle. Currently 45 per cent of offices do not have showers, something which almost a quarter of those surveyed said would encourage them to consider commuting by bike.

Overall, 38 per cent of office workers surveyed said that they would consider commuting by bike if their workplace had better or more facilities.

Why better by bike?

The benefits of cycling are well documented from reducing car and traffic pollution to improving health.

Nationally for every £1 invested in cycling, £4 is put back into the local economy. Bristol’s Cycling City programme from 2008 to 2011 showed that for every £1 spent, the city gained as much as £20 of economic benefit.

For Bristol employers, a healthy cycling workforce reduces sick days, increases mental wellbeing and productivity, not to mention helps combat traffic congestion for local deliveries.

Building on success

The good news is the number of people cycling to work is growing. From 2001 to 2011 people commuting by bike rose from 8,108 to 16, 211 (ONS), a growth rate of 100 per cent.

Bristol as European Green Capital in 2015 invested heavily in boosting its cycling infrastructure to 200 miles of cycleways and freeways connecting every area of the city. At least £16 per head of the city’s population is being spent on cycling every year until 2020 through funding secured.

Business zones in the city are integrating cycling infrastructure from the ground up such as Temple Quarter Enterprise Zone near Bristol Temple Meads train station, which has a target of 17,000 new jobs by 2030. A new cycling hub with increased secure storage is planned for the station to meet this demand.

The research shows that, compared to five years ago, cycling provision is increasingly accepted as an integral component of Grade A office specification.

As cycling continues to grow in popularity, workplaces now need to provide facilities which can cope with rising demand, and technology such as mobile apps can play a significant role in addressing this.


Bristol businesses must ensure their service provision for cyclists meets the evolving expectations of today’s worker. 

Access the BCO research page to download the report 'The Market Cycles' 

25 Aug 2017

Office moves, big change and corporate culture


Commissioned by the BCO and prepared by KKS Strategy, the report called'Corporate Culture: How Office Moves and Office Consolidations can Create Cultural Change' looks at the impact of workspace design and company leadership. Businesses are thinking more carefully about how to manage internal change in the face of profound external change, to protect their most important asset – their people.


In part due to the geopolitical climate, we’re likely to see some profound changes to how companies worldwide operate over the next few years. A number of banks and financial institutions are set to move staff from London to bolster their European operations post Brexit. Technology is also increasingly changing the shape of work, with artificial intelligence holding the potential to alter the shape of our jobs, automating simpler tasks to give people space to think more creatively.

As businesses evolve and change with the times, so too does the workplace. This may involve moving to a new office, altering the layout of an existing one to accommodate growth or a merger, or changing how and where a business operates to meet differing industry standards. We’re also becoming increasingly aware of the role a workplace can play in the well-being and productivity of employees. As such, businesses will need to think carefully about how to manage internal change in the face of profound external change, to protect their most important asset – their people.

Human Resources can, and should, play an important role in this. There is a commonly held misconception that HR is a back-office function. Often, however, HR is a bridge between the commerciality of an organisation and its workforce, and is therefore well placed to help organisations manage workplace change. A recent report from The British Council for Offices (BCO), Corporate Culture – How office moves and consolidations can create cultural change, suggests some key ways HR can be used to do this:

Be involved

Often, HR personnel find themselves brought in to a programme of change at a late stage, with no chance to make a positive input to the process. They’re forced to implement a programme that they may have fundamental reservations about.

Bringing HR in early means that they can use their insights into the organisation to make valuable input, and that they are more likely to feel comfortable with the changes they will be helping to enact.

Be consistent

HR is in a unique position to support the cultural change throughout all stages of the employee life cycle, through recruitment, orientation, appraisals, reward and recognition practices. It has the means to ensure that the desired office culture is reinforced.

For example, if the goal is to engender a collegiate and team-oriented culture, the reward and recognition structures should not be solely focused on the individual. Often, cultural change initiatives fail because there are fundamental contradictions in the behaviour that is sought
and the behaviour that is rewarded.

Be open

Communication with staff is vital to ensure that they have the information they need to feel secure in their position in the wake of upcoming organisational change, with a view to preventing high levels of attrition. The HR department, which often discusses pastoral issues with staff, is a natural choice to facilitate communicating this information.

The thoughts and input of workers throughout the change process should also be gathered, so that the workforce feels engaged and listened to. Focus groups are a tried-and-tested method to achieve this, but HR professionals also have the opportunity to provide an informal ear to concerned workers outside of formal feedback sessions. Throughout, it is important that HR personnel are managing expectations as to the impact this feedback will have, to ensure that trust isn’t lost if staff suggestions aren’t carried out.

Be aware

The HR department can also be used to monitor the success of organisational change. It has access to data such as absences due to sickness, which can be used to understand levels of staff happiness or stress.

As well as this, HR often acts as the cultural thermometer of a company, given its frequent contact with employees daily. Even without needing to look at data, HR should be able to provide useful insights into the success of an organisational change.

Indeed, the best measurement of successful organisational change is a positive and strong corporate culture. It’s difficult to define, but enhances an organisation’s performance and pervades all aspects of the business. A weakened or toxic corporate culture, impacted by poor change management, may result in a failure to meet commercial goals.

For this reason, companies across the globe need to think seriously about how best to make use of HR next time they undergo any kind of workplace change, be it in response to growth or downsizing, a merger or a relocation. By doing this, businesses can create a working environment that not only can survive unanticipated events and crises, but make the most out of today’s frequent and disruptive accelerating challenges.



-Katrina Kostic Samen, Managing Partner at KKS Strategy, and the Senior Vice President of the BCO.

Access the BCO research page to download the report to find out more on corporate culture. 

21 Feb 2017

Wellbeing and the future office


Burges Salmon report The Future of Corporate HQ: Is London's Dominance Waning?
This is from independent UK law firm Burges Salmon LLP considering issues that will shape the future of the headquarter office and which are identified in our research paper: 'The Future of Corporate Headquarters: Is London's Dominance Waning?'. You can follow the discussion on the future of the headquarter office by using #futurehq on Twitter

Yoga, pilates, French-speaking (basic), sewing bees…all pastimes safely confined to the local library on a Monday night, right? Umm no actually… wrong…they’re all activities happening right now in an office near you. 'Nose to the grindstone', 'lunch is for wimps'…now as outdated as Gordon Gekko’s striped braces – all over London and beyond employers are embracing the concept of employee wellbeing. And it makes good business sense to do so.

Stress and mental health issues remain a constant as top causes of long-term employee absence and, as any HR professional will affirm, managing long-term sickness absence is one of the most expensive and disruptive employee issues to deal with. So it follows that an employer that takes positive steps to help reduce the pressures on its employees by improving both their mental and physical wellbeing stands to benefit. As employee engagement and productivity increases, so staff turnover will go down.

A focus on employee wellbeing is also a powerful recruitment tool. With London housing costs forcing people into increasingly long commutes, the prospect of working for an employer that recognises and takes active steps to offset the negative effects of this, is highly attractive. A comfortable, well-designed working environment with the opportunity to participate in activities that the commute would otherwise rule out makes for a winning combination.

Health and wellbeing is one anticipated change to the headquarter office over the next five years.  If an employer fails to take heed it could find itself out in the cold.

17 Feb 2017

Flexible working and the future office

The Future of Corporate Headquarters: Is London's Dominance Waning? BCO And Burges Salmon Report


This is from independent UK law firm Burges Salmon LLP considering issues that will shape the future of the headquartered office and which are identified in our research paper: 'The Future of Corporate Headquarters: Is London's Dominance Waning?'. You can follow the discussion on the future of the headquarter office by using #futurehq on Twitter.

People are demanding to work differently – the ‘9-5, job for life’ model is fast becoming outmoded and no more so than in London, where agile working, flexibility and portfolio careers are the buzz words ‘du jour’. So for employers keen to win in the war for talent, an enthusiasm for looking imaginatively at how and where their employees work is key.

With housing costs making central London living out of reach for most, many employees are looking to work for employers who are willing to embrace regular home-working and have in place the technology to allow this.  Cutting out the commute can be a win:win for all; offering opportunities for the employer to reduce/reallocate office space and, for the worker, the benefit of valuable time-savings.

However, beware the bear trap that is ‘out of sight out of mind’. Employers’ responsibilities towards their employees don’t stop at the revolving doors in the HQ atrium and the contract of employment may need to be updated accordingly. For example, care needs to be taken to ensure that the home environment offers a safe place of work for the employee and Working Time obligations and data protection requirements must continue to be met.  Equally the employer will want to ensure that acceptable confidentiality standards can be maintained and that expectations as to required levels of productivity are clearly understood by the worker.

However, with employees increasingly welcoming the opportunity to work from home on a regular basis, employers who are able to offer this should reap the rewards from this competitive advantage.