The most fundamental change to the use classes system for more than 30 years was quietly introduced by the government last week.
Planning is rarely the sole driver for change, but at the moment it looks like a very positive move that will quickly bring much greater flexibility and therefore more opportunities to landlords, occupiers, investors and developers by bringing the primary commercial uses into a single Class, Class E from September 1st.
Above all the changes are intended to help town centres and there’s no question in our minds that the new regime will be an improvement, introducing more flexibility to change tenant mixes, fill voids and respond to changing market and seasonal demands more quickly. The scope for “part use” will also add further flexibility. However, it’s no replacement for a long term vision – and the large scale regeneration proposals that many of our urban centres still need will continue to progress through the planning process as before – but this move makes short term fixes, including for larger, more challenging assets such as department stores, easier.
Out of town locations should benefit too. Retail and shopping parks can more readily integrate a greater mix of uses – from the best parks wanting to bring in different occupiers to create more of a destination feel to providing an extra boost for tertiary parks needing to increase footfall or indeed to transition into other commercial uses altogether. Will this start to polarise in town and out of town in certain locations as a consequence? Quite possibly; this is certainly an area to watch.
Out of town office locations and business parks should become more attractive too, with health clubs, retail and other amenities that occupiers welcome being much easier to incorporate. We’ve talked before about a new approach to office working through hub and spoke locations helping town centres – how these changes may dilute or increase this shift will also be one to monitor.
Although there are no changes to distribution – B8 – increased flexibility for lighter industrial and R&D uses with the old Class B1 should open up more opportunities, especially in edge of centre and suburban locations.
At a practical level, we’re expecting a flurry of certificates of lawfulness to establish baseline positions to leverage the greater flexibility Class E will introduce. The implications for CIL and existing planning policy will be important too. Meanwhile our colleagues in valuation and rating are exploring the wider impact on portfolios of these changes.
The challenge for the industry now is to work out whether taking advantage of the greater flexibility of uses afforded by Class E is the right approach for the challenges they are facing and if so, the best route for each scheme or asset.
A one-size-fits all approach won’t work – location, demographics, transport, local authorities and consumer demand/impacts will all play varying roles in the decision-making process, as will the details of the prevailing planning consents. (This last point might close the door to these opportunities even before it is fully open.)
There’s no doubt, though, that the retail, leisure and office sectors will all change significantly as a result of these updates and the time between now and 1 September can be very productively used to work out how best to take advantage of these changes.