Feargus O'Sullivan is a contributing writer to CityLab, covering Europe. His writing focuses on housing, gentrification and social change, infrastructure, urban policy, and national cultures. He has previously contributed to The Guardian, The Times, The Financial Times, and Next City, among other publications.
Vacant properties add up to more than eight times the size of Central Park. The city could do more to encourage short-term uses of these spaces.
Never let it be said that London doesn’t have any space.
The U.K. capital may be undergoing a housing affordability crisis, but it still has a staggering amount of vacant commercial space, as well as land approved for building where no work has yet started. So says a report released today by British think tank Centre for London, which reveals just how much of London’s space is being left unused.
Across the city, over 24,000 commercial properties are vacant, more than 90 percent of them having been so for six months or more. The amount of land given planning approval where development has not actually begun, meanwhile, reaches up to 2,700 hectares, or 6,672 acres. That’s equivalent to nearly eight times the size of New York’s Central Park, effectively stuck in limbo within London. Given the hunger for space in the city, this stasis is perplexing. So what’s causing it?
The report isolates several reasons. Developers’ over-optimistic planning is partly to blame. Commonly, they clear development sites of tenants only to find that the actual process of getting work started takes longer than expected—months, even years. There’s also a lack of information for prospective tenants on where the empty units are. London’s boroughs are not currently obliged to publish a register of unrented units and developers can lack the will or means to reach out to prospective users.
Another hurdle is regulatory. An act dating back to 1954 bans commercial tenants from subletting unused parts of their premises to other tenants at a reduced rate. This means that businesses often leave unneeded space empty, when it could in fact be productive.
Finally, there’s another possible reason for the high vacancy rate—one not mentioned by the report, but which is a widespread topic of conversation in British public life. That’s the phenomenon of land banking, in which developers buy land parcels with the intention not of developing them but of using them as a speculative good. There’s a growing public awareness of land banking in Britain, so much so that politicians across the political spectrum are now at least paying lip service to the idea of ending it.
Ironing out kinks in the development process could free up space for use (and make land banking less attractive), but some vacancy is still inevitable. It’s to this end that the report advocates what it calls “meanwhile use.” That means signing over of more London real estate for short- and medium-term occupancy, typically at lower rates.
London, like many cities, already sees some of this activity, in the form of the pop-up businesses, such as the container parks that spring up on some development sites. Many otherwise vacant buildings are also occupied by property guardians—tenants who keep vacant buildings in good condition by living in them on (very) short-notice tenancies, and in return get a lower than average rent.
London needs to make it easier for landlords to get involved in this kind of medium-term tenancy, to ensure that the city has the kind of flexible, transient space that helps spark its economic and cultural resilience. The mayor, the report suggests, could even create an award for the most inventive, socially sustainable plan for using a “meanwhile” site.
This seems highly sensible, but there is still cause for caution. Encouraging “meanwhile” use with an overwhelming emphasis on making things easier for landlords could have serious pitfalls. It risks privileging the needs of landlords over tenants, providing extra avenues for developers’ profit without necessarily providing a secure enough basis for the people using their properties to thrive.
This already happens, to an extent. As a CityLab article noted earlier this year, the companies managing London’s property guardianship schemes have already developed a reputation for exploiting tenants with no other affordable choices and using the scheme to avoid ensuring decent living conditions for them. A situation in which short-term, poorly protected tenancies became the norm would risk pushing even more London residents and employers further toward a precarity that already hangs over the heads of many.
The report partly addresses this issue—by advocating for clearer, rigorously enforced “exit agreements.” These would be contracts for interim tenancies with relatively standard terms that could, if properly worded and policed, create a degree of security and more concrete expectations for both landlords and tenants. A universally agreed code here that is enforceable by the city could indeed increase confidence in short- and medium-term lettings for London buildings. And if London can create a system that ensures tenants don’t get a raw deal, it could certainly help remove the anomaly of offices and warehouses lying vacant in a city that’s crying out for more room to live and work.