It’s no secret that there is huge pressure on space of all kinds in London – let alone D1 space. Prohibitively high house prices and the demand to build more housing stock are rarely far from the headlines. If you follow this blog, you’ll be well aware that it’s a similar story in the office space sector. Construction all but came to a halt during the credit crunch and – although it has now picked up again – the time lag has created a mismatch between supply and demand causing record office rents. Ian has blogged about how converting space from commercial to residential to ease problems in one sector is merely exacerbating similar issues in another.

So how is the D1 space sector fairing. If you don’t know what D1 space is, it’s institutional space – educational, medical or religious. Take a look at my earlier blog post on D1 property, which explains all!

Our clients are always telling us how difficult it is to acquire D1 space, and for the most part they are right, it is very challenging. We often see developers trying to convert existing D1 space to other uses (mainly residential) and despite this being an incredibly difficult process, they often succeed. This leads to a net loss of D1 space, further tightening an already challenging market!

To counteract this trend, how can more D1 Space be created? There are two possible routes available:

1. Apply for planning permission to convert an existing building to D1 Space

An existing (non D1) building will be designated for other uses – e.g. office space, commercial use or even residential – and it’s possible to apply for planning permission to convert it into D1 space. This process can be complicated, so we would always recommend employing a planning consultant to assist; we have worked with many over the years, and I’d be happy to make a recommendation.

Some changes of use are easier to achieve than others: for example, changing a small office building into a college of higher education may be fairly straightforward. However, converting a house in a residential street to use as a nursery will be nigh on impossible!

2. Local planning authorities demanding D1 space inclusion within any new developments

Creating D1 Space in this manner is becoming more and more common. Often re-development involves demolition or conversion of existing D1 space (e.g a church conversion), so the local authority may well be under pressure to include extra community space in the scheme to compensate. Instinctively, many developers may consider these prerequisites to be troublesome at best. However, with some advice from a D1 specialist (such as myself) this type of space can be become very valuable, if the correct considerations are made and appropriate steps taken.

The good news for potential occupiers is that this type of space is purpose-built and often very well designed, with good outside space and possibly parking/drop off if a nursery is included. Larger developments of this type are often within designated areas of urban regeneration where demand for nursery space and medical uses is high.

On the flip side, this type of space is often presented in shell and core condition and therefore can be very expensive to fit out. However that is where good agents come into their own, negotiating with the landlord on your behalf on capital contributions and rent free periods to make the space financially viable and a deal possible.

If you need help acquiring D1 space in this challenging market, please contact us.

How is new D1 space created in a competitive market?

About Alex Stanford-Tuck

Alex Stanford-Tuck

Alex Stanford-Tuck of Somers Property is a ‘niche’ agents who specialise solely in the institutional property market or property within the D1 or C2 use classes - often called the 3rd sector. Alex's clients are typically from the educational, religious and the medical professions.

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