1 To review the office market in Bakewell in the light of pressures for change from office to residential in town centre sites.

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1 Page 1 5. THE BAKEWELL OFFICE MARKET (A610611/BT) Proposal 1 To review the office market in Bakewell in the light of pressures for change from office to residential in town centre sites. Within the context of prevailing policies, to inform decision making on office development within the town in the light of the following applications. To help inform the formulation of the relevant part of the Local Development Framework. RECOMMENDATION: 2 That the report be noted Policy/Legal Background 3 Development Plan policies were written to fulfil national park purposes. There is recognition that the national park is a limited and precious resource, which is under pressure for development because of its accessibility and attractiveness. Consequently the amount of new development permitted, particularly residential will be limited and mainly needs based. 4 Policies are generic and this is emphasised in paragraph 1.18 of the Structure Plan, which states that policies are applied in sequence: firstly the general strategic policies (GS1, GS2) then the spatial conservation policies (C1, 2, C3) then all the detailed policies relevant to the case. Individual policies must not be selected in isolation. 5 Policy GS2 requires that in considering development proposals, particular regard be given to Bakewell s importance as a major centre in the National Park. 6 Policies E1-E4 address economic development. Policy E4 was specifically written to safeguard employment sites in the knowledge of pressures for development. Applications for change to non-employment uses are treated as departures. 7 Local Plan policies LB6 and LB7 allocate sites for industry in Bakewell including B1 office and the redevelopment of Lumford Mill. Policy LB9 allows for A1, A2 and A3 (now A3, 4 and 5) uses within the central shopping area. 8 The Development Plan makes no allocations for open market housing. Policy HC1 allows for open market housing within (designated LC2) settlements by conversion, where there is a non-conforming use or where the valued characteristics of the Park are enhanced. Exceptionally provision will be granted for affordable housing to meet local needs. 9 In addition subject to compliance with certain criteria in the GPDO, planning permission is not normally required to for a change of use from Class A1 (shops) or Class A2 (financial and professional services) to a mixed use of A1 or A2 and a single flat or vice versa. Key Issues 10 What is the current situation regarding office provision in Bakewell? In the event of over supply of office space what criteria should be met before other uses are given favourable consideration. Do these criteria have a wider application beyond Bakewell?

2 Page 2 Background APPENDIX 11 In recent years there have be several applications to convert office space in Bakewell to residential. This is in part because Bakewell is such a desirable place to live, and in the virtual absence of new open market housing, commercial properties in and around the town centre are under pressure for residential use. Adopted polices safeguard business land and buildings, in order to prevent unnecessary demand for new employment land in the national park where suitable sites are limited. To help inform decision-making, a study of the office market was commissioned in As circumstances may have changed, another report was recently commissioned from property surveyors who have specialist knowledge in this area. The findings of these reports are discussed below Report Early in 2003 the Authority commissioned a local business and property surveyor to give an opinion on rental office accommodation within the Bakewell area. He advised that first and second floor accommodation within the town, without parking, generally above retail outlets, would let at that time between 9-11 per square foot. However, more up market, quality accommodation with car parking such as Rutland Works should have a rental value of around 13 per square foot. The rental figure includes a 50p per square foot premium where offices are air-conditioned. 13 Also in 2003, the Derbyshire Dales Economic Development officer advised that general demand for office space in the Bakewell and Peak District area had declined substantially Report The report is from a Sheffield property surveyor s practice, which also operates in the Bakewell area. It looks at the demand and supply of office space and the investment market. The report is summarised below: 15 Demand for additional space: Levels of economic activity and the suitability of existing office buildings drive the demand for additional space. Decisions on accommodation are made on the following criteria: Business trends Anticipated employment trends Merger and acquisition or consolidation Locational preference Technological change in work practices Policy intervention including land use, car parking 16 Bakewell office market: 1. With certain exceptions, the distribution of types of employment within Bakewell is similar to a large commercial centre such as Sheffield. 2. The demand for offices within Bakewell: Derives from the demand/needs of the local community rather than the attractiveness of the town as an office location. Is heavily dependent upon locally generated and sub-regional demand. Is dominated by smaller, fewer, local organisations when compared with nearby towns. 3. Bakewell has a relatively small office based sector, which largely serves the local area. These are distributed between the town centre and business park offices. 4. The attractiveness of the town is also a constraint on further development.

3 Page 3 5. Bakewell has a lower need for services for its own population and organisations and is less attractive to occupiers who might just as well locate a few miles away close to larger commercial centres. 6. The surveyors estimate the current office stock in the town centre to be sq m (120.55sqft) of which approximately 83% is occupied. 17 User requirements: Businesses increasingly seek to arrange staff on a larger single open plan floor (floor plate) or over several open plan floors. Consequently older buildings with narrow floor plans are deemed unsuitable because: Do not suit contemporary ways of working. Lack scope for raised floors carrying cabling equipment. Do not have the right image for firms that see themselves as market leaders. Larger occupiers need modern office space whether new or refurbished. 18 However small cellular offices in older buildings or converted dwellings may remain attractive for solicitors/accountants engaged in private client work and for small service sector businesses needing only a few hundred square feet. 19 The take up of office accommodation in the town centre is relatively slow compared with other nearby commercial centres and this may be due to: Inability of a small market town to compete with nearby commercial centres. No rail service-an increasingly important factor. Available office floor space at any one time. Much of the existing space is outdated comprising a mix of older purpose built offices, conversion of residential or industrial premise and some modern offices. Outdated stock is reflected in rental values and will attract a different market to new build. 20 Technological developments have had a major impact on office practices, particularly the speed and volume of information. It has also questioned whether workers have to work at the office or be required at all. 21 The need to accommodate modern technology is a major factor. Bakewell has many older buildings in the town centre which have small rooms, often on upper floors. These are not desirable for most office requirements, especially when Disability Discrimination Act requirements are included. 22 Supply: The majority of vacant offices are offered for rent rather than for sale. Rents in the town centre range from 8-13 sqft for newly constructed offices and these are normal for this type of accommodation. Deepdale Business Park will have 17,500sqft by 2007 and Riverside 15,000sqft of varying quality 23 Long term trends: These are seen as difficult to predict. Investors seek: High levels of occupancy Shortage of good stock Resilient levels of tenant demand Strong residual land value

4 Page 4 24 Yield for good quality investments are around 6.5-7%. The demand from investors is dependent on yields from other investment sectors and the tenant demand. This means when costs of construction and finances etc are taken into account without rents of 13sqft some of the new developments would not have occurred. 25 However, developers have to consider the level of occupier demand. Where the capital value does not have to be maintained, rentals may be less to reduce periods when offices are vacant. 26 Meeting occupier demands: The report states that the rate of development has ensured that the amount of quality office space coming onto the market is broadly in line with demand. There are a number of local developers who operate in this market to provide this accommodation. Without occupier demand, developers will seek alternative uses; and until empty offices are let and income producing, they are unlikely to continue with new office developments. 27 The 2007 report concludes: There will always be a number of older offices vacant and available for letting because of limited local demand. Those offices with the greatest number of adverse factors will be the ones that remain vacant for the longest period of time. 28 More modern offices should be attractive to a greater number of occupiers and perhaps attract occupiers from outside the Bakewell area. However firms that employ many staff may be put off by the limited number of potential employees in the town and poor transport connections. Potential occupiers are seeking premises in areas with good access to alternative means of transport and an existing labour supply. 29 Officer comment: Additional points: There have been subsequent discussions with the author of the report. Additional points are as follows: There is no threshold for optimum vacancy rate. (However it is understood that once a property has less than 50% occupation it can become uneconomic). Owners want flexibility to upgrade and change the configuration of offices. New build meets this requirement. The Disability Discrimination Act dissuades potential users against first-floor offices. Older buildings with offices less than 500 sqft floorspace are seen as a liability. Whereas new build can be attractive as they normally have the flexibility to add, or include by alteration, similar units (eg new units at Riverside Business Park) There is a preference to buy rather than rent smaller premises or even floors as they are seen to represent a pension investment. This is more evident in Bakewell as it is an affluent town. 30 Policy issues: The starting point for decision making is prevailing policy and thereafter, material considerations. Development Plan polices were written to safeguard existing business premises and provide opportunities for additional employment space where required and appropriate. 31 Policy E4 states: Planning permission will not normally be granted for development which would lead to the loss of existing industrial land and buildings or business premises. An exception may be made where the use for an employment purpose is not compatible with other Development Plan policy.

5 Page 5 32 Polices for Bakewell central shopping area imply a degree of flexibility between town centre uses. Other polices seek appropriate uses to conserve the character of historic buildings and to retain the character and amenity of an area. Furthermore planning permission is not required for the creation of a single residential flat over an A1 shop or A2 office. 33 The surveyor s report makes it clear that there is currently limited demand for small older office space, especially on first floor and where there are constraints against new technology eg in some historic buildings. There is a case for exceptionally accepting the loss of such premises to other appropriate uses, including small scale residential within the town centre, but not on industrial estates where such uses could compromise the primary use. 34 On the other hand new purpose designed offices ought to remain, especially larger offices and those on industrial estates. Furthermore Bakewell is a major centre within the Park which policy GS2 seeks to support within the town centre and it is important to sustain the vitality which is a product of the diversity of land uses including offices. It is noted the District Council s Economic Development Officer would have liked to have seen research on latent demand for offices in the Bakewell area and whether the relatively high rental values being asked for in new developments are dampening this demand. Although beyond the scope of the report Officers share this view, especially as they have been advised that new B1 office space at the Riverside Business Park is to be let at /sqft (basic to comfort cooled offices) as opposed upto 13 around the town centre. Clearly there is a difference in environmental quality between the two locations and build costs will be higher in the town centre area. Nonetheless, it is understood that the intended redevelopment of the Riverside Business Park aims to address latent demand by offering competitive rents. The implication here therefore reinforces the Officer view new purpose design offices ought to remain as offices. 35 Planning applications for other uses: The office market is a material consideration in determining applications for other uses. Officers are concerned that where planning permission is required, pressure will be applied to permit offices to go to higher value residential use without proper justification as a departure from adopted policies. Therefore in order to help decision making on applications which seek other uses, it is suggested that applicants are requested to address the following points: 1. Lack of need: Evidence of genuine attempts to let or sell the premises for a realistic rent/price over a period of 6 months. Attempts only to let and not sell should not necessarily be taken as a basis for justifying non-employment uses. 2. Non-residential uses: Before residential uses are accepted it is reasonable to seek other uses that retain employment. Often the investment means that the building could later revert to office use. Other factors such as design, amenity, parking and servicing will also be taken into account. Evidence must demonstrate that other employment generating uses have been considered and are unsuitable. 3. Residential uses: are unlikely to be accepted where: a. There will be loss of new purpose built office space b. Buildings are readily capable of being adapted to modern requirements. c. On industrial estates. d. Where a suite of serviced offices will be compromised

6 Page 6 Residential uses are more likely to be considered favourably in: e. Buildings that are unsuitable for office use by virtue of access, size and nature of the building. f. Former domestic property and property outside the central shopping area (to prevent needless loss of town centre A2 offices). Other factors such as design, amenity, parking and servicing will also be taken into account. 36 Members should note that there are pressures elsewhere other than in Bakewell to use small business sites for residential purposes. The sequential approach for a departure from adopted policy described above could form the basis of decision making in these cases. Resources 37 No additional resources are required. Risk Management 38 This report should inform decision making on planning applications and thereby help conserve the character of the National Park. It will also feed into polices to be included in the Local Development Framework. Human Rights, Equalities, Health & Safety 39 There are no issues to highlight Consultees 40 District Council: Economic Development Officer: Fully supports the Officer comment but no comment on affordable housing. 41 None The suggestion that applicants, in this case, should be requested to address Points 1 and 2, on the evidence of 'Lack of need' and the consideration of other nonresidential uses, is supported. These criteria could be widely applied, not just in the context of Bakewell. Would like to have seen, however, some research into latent demand for offices in the Bakewell area and whether the relatively high rental values being asked for new developments are dampening this demand. The consultant's list of criteria for making decisions on accommodation does not include costs. The District Council's Economic Development Unit produces and updates a 'Sites and Premises Register' which lists land and property available for employment use in the area. Local estate agents provide most of the information in this Register. In responding to enquiries about the Register, staff of the Unit are frequently contacted by businesses, both local and non-local. The general impressions gained from these contacts are that the main difficulties facing businesses in Derbyshire Dales are: The recruitment of the right staff Inadequate local infrastructure The shortage of good quality, affordable premises is also a factor. Enclosures

7 Page 7 List of Background Papers (not previously published) 42 Bakewell Office Market a report commission by the Authority from Mark Jenkinson and Son, Surveyors. Report Author 43 Bryan Thompson Planning Manager (South) Publication date 8 March 2007