Glenn Delve is the founder and Managing Director of Ocea Group, a property development company that specialises in commercial to residential conversions.
Here he discusses his views on the future of the up-and-coming development niche.
What do you do at Ocea Group?
I founded the Ocea Group in 2014 to convert commercial property spaces into residential properties. We started with small projects consisting of 4-12 units but have moved onto much larger projects of 70-95 apartments.
What made you choose this development niche?
I’ve always been interested in the way our city’s commercial spaces change over time. In the past, there was a massive push towards creating office spaces, particularly in city centres. This proliferation of offices led to shifts in how people interacted with their city centres and the surrounding areas.
But then, in recent years, there’s been a push towards industrial parks and out-of-town commercial spaces. Also, after the 2008 financial crisis, plenty of companies went out of business. The result was large swathes of office space left unoccupied because commercial tenants didn’t see them as desirable under new working models.
Combine this with the longstanding housing shortage, and there was a clear gap in the market. Converting offices into residential properties saved the issue of finding viable land for housing projects while also investing back into areas that were losing their value.
I already had an interest in the property market, having overseen the £50m further development of a large sports venue, and an almost lifelong interest in investing in residential property. So when I saw this potential gap, I used my previous business experience to get involved. And so Ocea Group was born.
Can you tell us a bit more about Permitted Development and how it relates to property conversion?
Prior Approval (PA) (a form of Permitted Development (PD)) is the process by which developers can convert commercial property into different usage rights. It still requires consent from the local planning authority. However, the application process is much less onerous, and permission is automatic if certain conditions are satisfied.
Until recently, PA rights covered office spaces’ conversion into residential use and other transformations, such as converting agricultural buildings, storage facilities, and light industrial buildings into houses and apartments. Indeed, the PA rights introduced in 2013 have been successfully implemented by developers in the last six years to construct circa 90,000 new homes.
However, in late 2020, the UK government decided to begin changing the rules of PD regulations, which opens up further potential for the industry.
What changes has the government made?
In August 2020, the government announced that PA conversions had to fall in line with previous property regulations relating to size and amenities, known as Nationally Described Space Standards (NDSS). PA projects previously had no size regulation, but now they must be a minimum of 37m2. In a further change, developers must also ensure adequate natural light and air to each habitable room.
Additionally, in December 2020, the government began a consultation into extending the PD rights for other property types. Their proposal also covers different commercial property types, such as retail, restaurant, and leisure facilities, along with the conversion of office spaces.
This proposal is open until the end of January 2021, but it’s very likely to move forwards.
What will this mean for the property development industry?
Well, as I’m sure we can all agree, the last few years have been very damaging to the UK high street. The rise of online shopping has decimated what used to be central hubs of commerce and business. Add the Covid-19 pandemic into the mix, and the result is a very different picture from what we’d see even two years ago.
As the government rightly stated, this has led to a surplus of retail space in many of our town’s high streets. Indeed, there was a net loss of around 6,000 shops throughout the UK in the first half of 2020. This net loss of retail units is a record high compared to previous years. It shows how the pandemic has exacerbated an already growing problem.
However, there is a light at the end of the tunnel. Providing the government’s changes to PD regulations go ahead, we could see property developers playing an instrumental role in the high street’s reinvention.
By granting a more comprehensive range of properties PA status, property developers such as Ocea can move forwards with projects at a much greater rate. In the past, many projects never got off the ground simply because of the red tape and administration hurdles involved.
Now, however, converting commercial spaces into residential properties will be simpler than ever before. The lack of planning application processes means that these vacant properties are more attractive to developers looking to reinvent our town and city centres.
Streamlining the process allows more property developers to redevelop the high street while also doing their bit to tackle the ever-growing housing crisis. In the long-term, this will hopefully bring more people back into town centres while also creating lifestyle hubs around these new residential spaces. Hopefully, it will also support local infrastructure, leading to a better distribution of services such as healthcare, bars and restaurants, and other lifestyle amenities.
Do you have any advice for anyone considering moving into this property development niche?
Although this sounds like a golden business opportunity, it’s still not without risk. After all, residential properties only sell if there are people who want to buy them. I think there might be a slight lag on uptake as people become accustomed to the idea of repopulating town and city centres. Still, once this happens, I foresee a boom in this area of property development.
I’ve written a book on the subject of commercial property developments, which arguably covers any specific and relevant advice I could give on the topic of property development. You can find a link to that and further information about me on my website.