In April, the government announced changes to permitted development rights, including new rules allowing the conversion of premises used for storage or distribution to homes without a planning application.

James Bent

Just as when legislation regarding office-to-resi conversions was introduced, this new policy could potentially have a significant impact on the market.

Currently, there is strong demand for storage and distribution units but a lack of supply. Speculative development has started, but the time taken to build out schemes is typically 12 to 24 months, creating a lag. Reducing the supply side by conversion could create additional pressure on logistics companies.

However, logistics companies need not be too concerned by potential changes to permitted development rights as most prime distribution sites comprise clad steel portal framed buildings with large footprints and their conversion to residential would be difficult from a cost and fabric point of view.

The changes are more relevant to distribution and storage buildings that are obsolescent due to their location, size, configuration, condition or other issues arising from sustainability. Many of these are currently being demolished to make way for new-build housing developments. But the changes to permitted development rights will encourage the re-use of these buildings, many of which are period properties that, once converted, would make attractive homes.

Typically, many of these buildings are within or around town and city centres. There is an argument these sites could be attractive to logistics firms, as the last delivery mile can present challenges, and to storage companies that like to have facilities close to their customer base. However, developers may achieve a better return through conversion to residential rather than collecting rents if the building is left as distribution or storage.

Change of use, conversion and refurbishment will help ease pressure on the development of green-belt land. The changes should also be welcomed as they will help developers to realise residential schemes with lower planning risk and shorter time scales. They also promote sustainability by encouraging buildings to be reused rather than demolished.

However, the reality is this change will affect a relatively small proportion of the UK’s storage and distribution warehouses. Solving the housing crisis will require long-term commitment and a package of radical and imaginative measures. Although change of use will help, it is still merely tinkering around the edges.

James Bent is a partner and head of logistics consultancy at Tuffin Ferraby TaylorIn April, the government announced changes to permitted development rights, including new rules allowing the conversion of premises used for storage or distribution to homes without a planning application. Just as when legislation regarding office-to-resi conversions was introduced, this new policy could potentially have a significant impact on the market.

Currently, there is strong demand for storage and distribution units but a lack of supply. Speculative development has started, but the time taken to build out schemes is typically 12 to 24 months, creating a lag. Reducing the supply side by conversion could create additional pressure on logistics companies.

However, logistics companies need not be too concerned by potential changes to permitted development rights as most prime distribution sites comprise clad steel portal framed buildings with large footprints and their conversion to residential would be difficult from a cost and fabric point of view.

The changes are more relevant to distribution and storage buildings that are obsolescent due to their location, size, configuration, condition or other issues arising from sustainability. Many of these are currently being demolished to make way for new-build housing developments. But the changes to permitted development rights will encourage the re-use of these buildings, many of which are period properties that, once converted, would make attractive homes.

Typically, many of these buildings are within or around town and city centres. There is an argument these sites could be attractive to logistics firms, as the last delivery mile can present challenges, and to storage companies that like to have facilities close to their customer base. However, developers may achieve a better return through conversion to residential rather than collecting rents if the building is left as distribution or storage.

Change of use, conversion and refurbishment will help ease pressure on the development of green-belt land. The changes should also be welcomed as they will help developers to realise residential schemes with lower planning risk and shorter time scales. They also promote sustainability by encouraging buildings to be reused rather than demolished.

However, the reality is this change will affect a relatively small proportion of the UK’s storage and distribution warehouses. Solving the housing crisis will require long-term commitment and a package of radical and imaginative measures. Although change of use will help, it is still merely tinkering around the edges.

James Bent is a partner and head of logistics consultancy at Tuffin Ferraby Taylor