You are here

Policy E2 Low-cost business space

E2

  1. The provision, and where appropriate, protection of a range of low-cost B1 business space should be supported to meet the needs of micro, small and medium-sized enterprises and to support firms wishing to start-up or expand.
  2. Development proposals that involve the loss of existing B1 space (including creative and artist studio space) in areas where there is an identified shortage of lower-cost space should:
    1. demonstrate that there is no reasonable prospect of the site being used for business purposes, or
    2. ensure that an equivalent amount of B1 space is re-provided in the proposal (which is appropriate in terms of type, specification, use and size), incorporating existing businesses where possible, or
    3. demonstrate that suitable alternative accommodation (in terms of type, specification, use and size) is available in reasonable proximity to the development proposal and, where existing businesses are affected, that they are subject to relocation support arrangements before the commencement of new development.
  3. Development proposals for new B1 business floorspace greater than 2,500 sqm (gross external area) should consider the scope to provide a proportion of flexible workspace suitable for micro, small and medium-sized enterprises.

Smaller occupiers and creative businesses are particularly vulnerable and sensitive to even small fluctuations in costs. To deliver a diverse economy, it is important that cost pressures do not squeeze out smaller businesses, particularly from fringe locations around central London, but also across the capital as a whole. Ensuring a sufficient supply of business space of different types and sizes will help to ensure that workspace is available for occupation at an appropriate range of rents reflecting the specification, quality and location of the space.

Low-cost business space refers to secondary and tertiary space, which is of a lower specification than prime space[75]. It is often found in locations such as back-of town centre and high street locations, railway arches, heritage buildings in the CAZ, and smaller-scale provision in industrial locations. It usually commands rents at or below the market average.

[75] See Glossary for definitions of prime, secondary and tertiary commercial property

There is evidence that the conversion of occupied or partially-occupied offices to residential use, through permitted development rights, is having a particular impact on secondary space in outer London and on the fringes of the CAZ[76]. This policy is intended to operate in those parts of London where there are particular cost pressures and a shortage of lower-cost secondary or tertiary space available for occupation. It will be most effective in those parts of London where boroughs have removed office or light industrial to residential permitted development rights through Article 4 Directions.

[76] Ramidus Consulting 2017 op cit / London Development Database monitoring

Where there is demand for workspace or viable existing business uses on site, development proposals for alternative uses should deliver an equivalent amount of workspace through the intensification or reconfiguration of space. Part B.3 of the policy applies in exceptional circumstances, where it can be demonstrated that it is not feasible to accommodate replacement workspace and existing businesses on-site through intensification or reconfiguration. What constitutes a reasonable proximity should be determined on the circumstances of each case having regard to the impact on business supply chains and access to labour supply. Relocation arrangements should be put in place prior to the commencement of development to ensure that disruption to existing businesses is minimised.

Larger-scale commercial development proposals should consider the scope to incorporate a range of sizes of business units, including for SMEs. Flexible workspace can include a variety of types of space including serviced offices and co-working space[77]. What constitutes a reasonable proportion of workspace suitable for SMEs should be determined on the circumstances of each case.

[77] Ramidus Consulting 2017 op cit section 2.3

If business space is demonstrated to be obsolete or surplus to requirements, it should be redeveloped for housing and other uses. Evidence to assess the reasonable prospect of workspace being used for business purposes should include strategic and local assessments of demand and supply, and evidence of vacancy and marketing (for at least 12 months at market rates suitable for the type, specification, use and size). This evidence should be used to inform viability assessments.