As we slowly emerge from recession and the property markets show a more positive outlook many of us have started looking to the future and how economic growth will be stimulated in our region.
One of the keys for growth is the ability to promote modern city centres that can mix commercial, retail, leisure and residential uses and it is the latter of these sectors where some of the greatest opportunities are over the year ahead.
During the downturn there had been little to encourage city residential development and few buyers looking to get on to the housing ladder saw the city as a viable choice. We see this changing however and within Newcastle both NE1 and the council have recognised the importance of bringing residential use back into the city and the opportunities there are for converting many of the vacant upper floors of buildings to residential use.We have seen a significant investment in the student residential market and at DTZ, we have received a growing number of enquiries from landlords, developers and Housing Associations who are each keen to make more of these under-utilised assets and tap into the potential of the private rental market.
Our clients recognise the importance renting will play in the future and a growing demand for such accommodation.
As the CBI noted in their research: “Meeting the appetite for renting with a supply of new homes in the private rented sector will help those struggling to find decent rented housing, will help businesses through the formation of a more mobile and dynamic workforce, and will boost economic growth and create jobs through new investment and construction output.”
To make such development easier the Government has implemented a change in legislation that now allows a change of use from offices (Use Class B1(a)) to residential (Use Class C3) meaning that new homes can be created in existing buildings without the need for planning permission. While there are certain conditions associated with such changes this amendment is clearly aimed at encouraging new development – boosting housing numbers and creating new jobs.
Within Newcastle city centre we see this change in legislation as a significant window of opportunity for a number of our older and secondary office buildings that can no longer meet the needs of modern occupiers but could present a great opportunity for new homes.
Owners of such secondary property should be aware however that this change in legislation has only been made for a period of three years that will expire in April 2016 and while the Government may consider an extension to the scheme, there are no guarantees. This window aligns well with DTZ’s forecast growth in residential property values and so for those willing to be bold there appears a fantastic opportunity to benefit from these changes while at the same time making a positive contribution to the vibrancy of our regional city centres.”
:: Jonathan Rudge, Associate Director, Development Consultancy at DTZ in Newcastle