AS York's affordable housing crisis continues in the absence of a local plan, business editor Laura Knowlson looks at the city's office stock shortage, and how the two have become intrinsically linked.

IN recent years York has found itself facing two conundrums, the first being a lack of housing stock forcing house prices in the city to rise, and the second a lack high quality office space which could potentially force businesses out of the city, and deter any new ones from locating within its walls.

Both are equally detrimental to any economic aspirations for York, and both can be attributed to a lack of investment and development in the city centre over the last decade.

However, over the last two years, the landscape of York's residential and commercial offering has altered significantly following changes to planning laws.

In May 2013 the Coalition Government introduced new permitted development rights, allowing office space to be converted into homes without the need for planning permission. The result has seen more than 200,000 sq ft of commercial space converted to residential in York in the past two years, with more to come before the 2016 deadline.

York's surge in commercial conversions might seem surprising, given the aforementioned conundrum B above. However York's office supply problems weren't centred around a lack of stock. It was more specific than that - a lack of Grade A stock.

Property experts Carter Jonas define Grade A as "new or newly refurbished office space where the building specification includes suspended ceilings and fully accessible raised floors for data/telecoms cable management, passenger lift and air conditioning facilities".

While York could offer multiple choices for available office space, there were few Grade A options, leaving the market offering in a seemingly permanent vacant state.

When international insurance provider Hiscox chose to move to York, bringing with it 500 new jobs, it couldn't find the premises it wanted, and instead invested £19 million in building a new flagship site in Hungate.

Alan Millard, chief operating officer at Hiscox UK, said: "When we decided on York as the location for our new office, we looked at a number of options.

"What was important to us was to be in the centre of town, similar to our other offices, and to have an open, collaborative space.

"However what we found was that the modern office space available in the city centre simply wasn’t big enough, and the older buildings didn’t give us the flexibility we wanted in terms of space. For us, building our own office was therefore the only truly workable solution."

Equally when long standing York law firm Langleys wanted a new flagship office to meet its aspirations of being a Top 100 law firm it too couldn't find an appropriate base for its 190 staff, and instead invested £1.2 million in refurbishing its existing site on the corner of Micklegate and Skeldergate.

Langleys managing partner David Thompson, said: "We did look for other alternatives but we came back to this building.

"There was only one other off plan property that we felt gave us the presence we required, but that didn't work in the end. There are no new offices being built in the city centre.

"This offices gives us everything we need. It has a great location, near to the train station and the city centre, and offers underground car parking; it ticks all the boxes. There is not much in the city centre that offers that."

So, as businesses with the capital to do so chose to invest in their own projects, the majority of vacant city centre office space remained just that; vacant.

That was until developers stepped, keen to take advantage of the new permitted development rights, and take the properties from the unpredictability of the commercial market to the strengthening residential market.

High profile city centre redevelopments in York include Holgate Villa, a 1950's office block in Holgate Road which is set to become 50 flats, Biba House where 24 flats have been created out of the old Hilary House tax office in St Saviourgate, Hunter House in Goodramgate which is to become 14 new apartments, the creation of 82 apartments at Hudson House in Toft Green, and the conversion of the former Crown Prosecution Service building at United House in Piccadilly into 59 apartments.

Now, for the first time, the trend has spread beyond the city centre as empty office space at Clifton Moor has been converted into apartments under the Halo development by the Helmsley Group.

John Reeves, owner of the Helmsley Group, says such developments can be used to increase the affordable housing offer, and in a bid to improve York’s housing situation for young people, he is only offering the Halo apartments to first time buyers for the first six months on the market.

Mr Reeves said: "These developments give the opportunity to provide apartments at affordable prices without having to go through housing associations as there’s no Section 106 costs usually associated with a change of use application. This means we can afford to offer them for sale at a price that’s affordable.

"We would never have done this development without the government’s change of use scheme. It has increased the housing supply, and ultimately the long term solution to solving York’s housing crisis is increasing supply."

Mr Reeves has been joined by York Outer MP Julian sturdy in calling for the Government to extend the permitted development rights beyond the 2016 deadline.

Mr Sturdy said: "I was amazed to hear that some of the office space at Clifton Moor has never been let since it was first built and this situation simply cannot continue.

"While ever we have an abundance of empty and underused office space in an area that I want to see these conversions continue without the unnecessary shackles of a bureaucratic planning process."

While some of the newly converted apartments can be classed as affordable housing, a low price tag doesn't accompany all the schemes in the city, with a need for more building still hanging over York.

And now, as more empty offices become residential, the need for new building and development remains the same for the city's office offering.

Commercial property consultancy Lambert Smith Hampton (LSH), fears a lack of quality office space in the centre of York could eventually force businesses to locate in other cities.

Adam Varley, director of Office Agency for LSH in Yorkshire, said he already had clients that had been forced into accommodation outside the city centre and there were existing significant requirements that may not be able to be fulfilled by the current stock.

He said: "I recently acted for a client that had to move from the city centre after the landlord decided to convert to residential and they had to relocate to a peripheral business park, which was far from ideal for them.

"There are also a number of requirements in the market that are proving difficult to fulfil at present and unless there is a strategy to improve the city’s office stock then ultimately we may see businesses decide to locate elsewhere, which could have a significant impact on the local economy.

"Permitted development rights has seen the conversion of significant amounts of commercial stock since its introduction in 2013 but the problem is particularly acute in York.

"York has a strong professional service sector and remains an attractive location for inward investment but it is now time for the City Council to examine its planning strategy to ensure that the city can continue to attract and retain the inward investment that will support York’s economic growth in years to come."