NACFB Magazine, Andy Reid: PD bridge still favorable while office stock is scarcePosted by oblixcapital on Oct 16 2018
Despite considerable growth in the past 5 years, margins and rates for Permitted Development Rights (PDR) conversions are being squeezed and we are approaching a period of consolidation. Desirable stock in the UK’s major cities is becoming scarce, with the majority of prime, unused office sites already converted or currently undergoing a residential conversion. Opportunities in these traditionally attractive areas are becoming difficult to source, but there is still a slice of the pie for the developer that’s willing to diversify.
The PDR market has been and will continue to evolve as a result of capital values and housing demand growing far quicker for residential property than for commercial. Whilst the market is still relatively strong, diversifying routes to sustainable housing stock is vital and developers are now testing the waters in UK’s secondary towns and cities where unused office supply is still ample. Changes in working practices and developments in digital technology – namely cloud computing – has allowed entire offices to become completely mobile, also acting as a catalyst for the constant supply of unused offices spaces ready for conversion.
Permitted development bridges – capitalising on PDR opportunities
The attraction surrounding PDR conversions is partly down to developers not needing to go through the traditional costly and time-consuming planning routes, providing a much faster process to fulfilling their objectives and demands of the end buyer. A general lack of desire to provide short term finance from the mainstream banks has forged a path for the more specialist players to tailor loans according to the objectives of each individual opportunity….