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Offices Converted Into Homes Is Driving Up Commercial Shortages

According to the most recent (Q2) RICS UK Commercial Market Survey, London and the South are seeing more offices converted into residential properties and nationally, the availability of commercial property is declining at a record breaking pace. The lack of stock is pushing many commercial property investors away from prime locations and into 'B' grade commercial property investments.

During Q2 2014, chartered surveyors saw a rise in the number of transactions of commercial properties being sold with Permitted Development Rights (PDR) to be converted into residential properties. UK-wide, a net balance of 49% of respondents said this activity was having a 'moderate' impact on commercial market activity, while almost one in five (net balance of 18%) said it was having a 'substantial' impact.

The picture across the country, however, was more polarised, with respondents in the north being less affected by PDR transactions with a net balance of 49% saying it was having 'no effect' on the market compared with 31% in the Midlands/Wales, 23% in the South and just 14% in London saying PDR was having no effect on the supply of offices.

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