Plans to convert offices may undermine innovation and growth

Old Street roundabout regenerationWhatever they might think, Governments don’t have a natural propensity for joined up thinking. Nor do they have a natural affinity with small businesses, especially those that emerge in non-traditional sectors. Governments may like to claim they can display both of these noble values, but experience tells us different. One thing they are prone to, however, is a frequent ability to fall victim to unfortunate juxtapositions of complex events that throw their inherent weaknesses into sharp relief.

And so it is we find that just as the UK government is loudly proclaiming its innovative thinking in easing laws to allow offices to be converted to significantly more lucrative dwellings without the bother of making change of use planning applications, news filters through that the Prime Minister’s flagship Tech City project in East London is already unable to provide enough of the right kind of spaces for the nascent businesses expected to rub up alongside the giants of Google, Microsoft and Facebook as the area hothouses talent and ideas.

Last week’s publication of the Media Technology Monitor from Colliers International framed the challenge for the small tech firms expected to take advantage of locating in Tech City. It said:

Tech companies are now looking at more institutional grade office space that can be branded to suit. A non-core location in the West End that exhibited such a trend is Paddington. Splunk, Nokia and TRG have all taken ‘conventional’ modern office space and have successfully ‘fitted-out’ the units they occupy to put the companies’ own personal stamp on them. Occupation levels within the Old Street area have risen rapidly over the past 12 months and sizeable requirements, anything above 15,000 sq ft, are finding it difficult to secure space. Intuit Technologies, who had a 16,000 sq ft requirement, has opted for brand new space in Victoria, away from the traditional and emerging tech heartlands.

There is a clear mismatch between the Government’s new planning framework which will encourage building owners and developers to convert offices to more valuable homes and its desire to develop enclaves of creative businesses in parts of London which already have a shortage of affordable and appropriate office space. In short, the Government’s attempts to boost the economy by changing the planning laws may well cost jobs in other industries.

This paradox was thrown into the spotlight in yesterday’s Guardian in a piece by Olly Wainwright. In it he quotes  Chris Brown, chief executive of Igloo Regeneration as saying: ‘The creative industries will be the first to go. Those places like Tech City will be increasingly vulnerable, as the businesses’ leases tend to be shorter than three years.’

London is not alone in fostering creative businesses in areas of cities which would prove lucrative feeding grounds for developers keen to take advantage of the chance to convert offices into homes.  The challenge for the small and creative businesses that are supposed to flourish in these areas might prove to be how they can deal with the change from a situation in which they are able to use design to cover up for the fact they have been unable to find ideal offices – putting lipstick on the gorilla – to one in which the offices aren’t available in the first place.

The ray of light lies in local authorities being allowed to grant exemptions for specific areas, as the City of London already has. This is clearly a policy that will have markedly different effects in different areas and we can hope that the government will bend to accommodate local needs.