Brockton Capital’s anticipated acquisition of City & Liberty’s 33 Horseferry Road development raises a fascinating and potentially pivotal question for the market over the future use of the building.
Our own research reveals that more than 600,000 sq ft of office space in Victoria is set to be lost to consented or developed residential use this year, with a whopping 1.5m sq ft of commercial space to be converted to residential in the next three years.
Indeed, 33 Horseferry Road itself is primed for redevelopment into a £400m, 300,000 sq ft residential scheme. The loss of office stock to residential space is a serious issue facing this market, and one which we have previously expressed our concern. While there is a good pipeline of grade-A office space with larger floorplates to suit the corporate occupier, there is a danger that the SME sector, which has historically been a fundamental occupier to the market, is being squeezed out as a result of lack of available space.
Significant amounts of surplus and poorly located office space around Millbank in particular have been converted to residential and transformed a forgotten corner of Westminster into a new residential enclave, but when better-positioned commercial space providing smaller units becomes vacant, it would be a shame to see it lost permanently from the supply. There is a significant demand from occupiers and they are prepared to pay strong rents for the right space.
The planning window is, of course, now closing, which will hopefully stop the flow. And in recent months, we have finally seen vacant offices, even with residential consent, sold for commercial use as rental values catch up. So, as well as keeping a healthy balance of uses in Victoria, there is certainly a genuine opportunity for investors to offer space to SMEs who are crying out for smaller quality units.
Mark Fisher, managing director, Tuckerman