Converting Vacant Commercial Premises to Residential Use
12 November 2020
The COVID-19 public health crisis has changed the way that we work and live, with the majority of the population now working from home. At the beginning of this year, the average annual Dublin commercial rent was €673 per square metre making it the fifth most expensive in Europe. However, the revolution in working from home and the move to a predominant online office culture has created an unexpected threat to the booming commercial property market.
Google, which employs 8,000 people in Ireland, has said that most of its employees will be allowed to work from home until July 2021 and has cancelled a planned lease for a 202,000 square feet office space in Dublin’s docklands. Twitter has also announced that employees have the option to work from home indefinitely.
At the moment, the majority of offices are filled with empty desks. It seems increasingly likely that this will remain the status quo for the next number of months as well as long term flexible working arrangements becoming a real possibility. In recent years, we have seen a surge in the development of commercial premises and the number of cranes seen in Dublin City Centre skyline has soared to an extent not seen since the Celtic Tiger days. However, with a looming potential change in office culture and lifestyles, there is speculation that these newly built or partly built office blocks are in danger of becoming the new “ghost estates”.
So as vacant office spaces and business premises begin to accumulate, would a conversion from commercial use to residential premises offer an alternative business model?
In general, converting a commercial building for residential use will require a grant of planning permission. In addition, there are a number of further requirements that must be adhered to in order to ensure that the planning and building controls and standards have been complied with.
Change of use
Converting a commercial use of a building to residential premises is considered to be a material change of use, which will require planning permission.
However, the Planning and Development (Amendment) (No. 2) Regulations 2018 (the 2018 Planning Regulations) introduced exemptions where a material change of use for certain classes of development would not require planning permission. These Regulations were enacted to maximise underutilised vacant commercial buildings for residential purposes as a measure to address the housing crisis. The exemption, however, is restricted to certain classes of commercial buildings that have been vacant for at least two years immediately prior to the commencement of works and where the structure concerned had at some time been used for the purpose for which it was originally intended. This therefore would restrict their application to new builds or to partly built developments which will generally require planning permission for a change of use from a commercial to residential premises. In addition, the 2018 Planning Regulations do not exempt the change of use from building regulations or design standards.
What could this mean?
It is too early to gauge how much commercial space will be needed back in the market if companies ultimately revert back to pre-Covid norms and whether oversupply will result in a long-term downturn in the commercial property sector. There may be an argument for the Government to alter the requirements in the 2018 Planning Regulations and introduce an additional class of exempt development for new or partly built commercial premises to assist developers and commercial landlords to quickly convert empty office spaces into medium or long-term alternative viable business ventures. This could be extremely valuable for those who may not be in a position to wait for the COVID-19 fog to lift and evaluate the overall impact on the sector or for business premises where a return to trading is not anticipated at all.
In the absence of such regulatory intervention, developers of new or party built office blocks who want to convert their commercial premises to residential use will have to go down the traditional planning route by applying for planning permission for a change of use.
Should you require any further guidance about any of the issues discussed in this article, contact a member of our Planning and Environment team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.