Commercial conversions to resi properties

The trend of converting commercial properties into residential units is not a fleeting phenomenon; it is a fundamental shift in property development that is firmly rooted in economic and societal changes. The convergence of factors such as changing work patterns, the increased demand for affordable housing, and the surplus of underused commercial spaces has created a perfect storm for this trend to thrive. As remote work becomes more normalized and traditional office spaces face reduced demand, the appeal of residential units in well-located commercial structures continues to grow. Former pubs, high street shops, office spaces, and even former bank buildings all offer the potential for conversion into modern apartments. Moreover, the need for innovative solutions to address the current housing shortage makes these conversions a logical and sustainable choice for the future.

We are actually doing a lot more of these. Developers are finding well priced properties in towns/cities, that offer a decent potential as multi-units or HMOS, with them being in the town and near to railways, they offer a good prospect to young professionals or people who work in the town locally. Since covid, this type of deal has popped up more often, probably due to a few businesses selling up or going out of business. Developers rarely keep them on as a shop, resi has a lot more income potential for the long term with no rates etc to rent it.

Since COVID the Manchester Mortgage Centre has seen an increase in enquiries surrounding the conversion from commercial to residential. Particularly from investors looking to convert large commercial properties into HMOs and service accommodations. With the decrease in demand for commercial properties property owners are looking to diversify their portfolios and increase cash flow. I do believe that this is a sign of things to come and we are only just scratching the suface.

Enquiries for commercial to residential finance applications are still coming through fairly regularly, albeit at a less frequent pace than they were a couple of years ago during the pandemic era.
When the rules surrounding GPDO were amended in 2021 there was a surge in enquiries over the following 12 months as this gave developers more choice due to increased availability of properties they were able to convert with minimum red tape surrounding planning permissions.
Most of the enquiries during this time were office to residential apartments schemes which came with the uncertainty surrounding people returning to work in town/city centres and building owners struggling with lack of rental payments needing a way out.
Things have definitely slowed over the course of this year from that of last year as more offices and businesses have re-opened their doors but the market is still there and still provides developers with an alternative to ground up land development and house conversion

There are still a number of Permitted Development rights that developers can enjoy to convert commercial to residential property. The most frequent we see used is the class MA to convert from commercial use class E to residential. This most often presents its self as the conversion of the upper or rear parts of a shop into flats.

You only need to look at our high streets in many locations and in particular at the secondary or tertiary parades, to see many vacant properties. With the UK being so far behind on meeting its house building targets, i see it as only natural that more residential homes are created in and amongst our high streets.

The pandemic accelerated the number of vacant commercial shops and so increased the attractiveness of taking low value commercial buildings and converting them it into higher value residential ones.

My view is that busy parades will remain buoyant but over time the empty and derelict ones will get fully converted to residential.