Why can’t London make better use of its empty and surplus spaces? Our research interviews identified three types of hurdles: landowners often overestimate the risks and undervalue the benefits of giving over a site to meanwhile use; the planning and licensing systems can make meanwhile projects difficult to undertake; and the lack of larger meanwhile use operators limits capacity to take over sites and manage meanwhile activity. We interviewed 15 managers and executives working for London’s bigger housebuilders and public organisations that own land in London, and 10 operators of meanwhile activity, to understand the hurdles they face, the benefits they derive, and how they could be encouraged to undertake more meanwhile activity.

Misaligned perceptions

Meanwhile use in London is in a state of transition. London landowners are becoming acquainted with it, but perceptions on the risks and rewards of meanwhile use are misaligned – and holding meanwhile activity back. We were surprised to find that most London housebuilders have opened at least one of their sites to meanwhile use. These landowners understood well the benefits that meanwhile use can bring, and their experience was largely positive – but the landowners that had no or little experience enabling meanwhile use were hesitant in doing more.

Amongst the latter, risk dominates internal conversations about meanwhile use. This isn’t surprising: asset managers are wary of opening up strategic sites to third party organisations in an industry focused on minimising risk, especially if the rewards do not register on the balance sheet. One developer described why their industry is slow to grow its practice of meanwhile use:

“There is always a risk factor within meanwhile use. It’s always riskier than non-meanwhile. Some organisations won’t want to carry that risk.”

Asset Management Director, large private developer

Landowners are particularly concerned about public-facing meanwhile activities taking root. They know legal powers will enable them to take control of the land as and when they need it, but they are worried about the political backlash and negative PR, at a time of low trust in the development industry. ³⁹ However, actual cases of controversy over exit are exceptions, not the rule. Out of a hundred sites, we only found three examples ⁴⁰ of community opposition to the closure of meanwhile activity. Experienced meanwhile use providers have built a reputation of smooth management and exit, on which they rely to find more sites. As one sector expert analysed:

“If you get the right licence, there is no impediment in getting your land back. Ask landowners if they ever had major problems with this. They won’t come up with actual negative stories of meanwhile uses.”

Meanwhile use sector expert

A few housebuilders also mentioned the uncertain nature of development, and how they fear that committing to a fixed-term meanwhile activity might constrain their future options – if they need to remove the meanwhile use early. As a large developer engaged in meanwhile noted:

“The main barrier lies in the unpredictability of development – which means developers cannot guarantee a length of lease – therefore have a low commitment to meanwhile.”

Asset Management Director, large private developer

But meanwhile operators noted that this leads to many missed opportunities, because the development industry has an “optimism bias”: it always takes longer to go through planning permission, consultation and contract out works than originally planned. We heard stories of meanwhile sites closing down, and then laying empty for another year.

“There’s a perception that development is going to happen a lot quicker – but no one admits to that upfront.”

Managing Director, small private developer

Landowners often do not perceive the benefits of meanwhile activity. Considering the economic and social value of meanwhile use requires taking a broader view of the development business model – and even then, there is a dearth of robust intelligence on the value of meanwhile use, compared to a “do nothing” scenario. Yet, housebuilders with experience of implementing meanwhile use schemes saw the benefits of meanwhile use in changing the image of an area and reinforcing the visibility of a project, as well as their own brand. As one housebuilder suggested:

“Meanwhile is brilliant for us, it starts to establish a place, letting people into the site, which becomes part of people’s mental map.”

Development Director, large private developer

Landowners also cited positive examples of the effect that meanwhile uses had on placemaking, while other benefits they saw included trying out tenants, improving safety, and creating a sense of community.

Despite a booming decade for meanwhile activity, the dominant perception amongst London landowners is that meanwhile use creates a large risk for a small reward – yet the actual experience of housebuilders that have implemented meanwhile activity is the opposite, especially for public-facing initiatives. The property guardianship sector, which is more mature, shows that landowners’ perceptions can improve, and the last section of the report suggests ways to achieve that change.

Planning, licensing and leasing

The planning and licensing system plays an important role in protecting residents from the negative impact of urban change. But there are elements of the system that make meanwhile use opportunities more difficult to realise, by narrowing the window of opportunity for meanwhile activity. The statutory target for dealing with a planning application is eight weeks for a minor scheme, which is met for 85 per cent of schemes. ⁴¹ Yet, eight weeks is a considerable wait for meanwhile uses that only have a year on a site:

“Timing is crucial – every week that we don’t get the space harms the equilibrium of this project.”

Director, meanwhile use operator

And meanwhile options tend not to be prioritised within local planning departments, given resource constraints and the overriding priority that most attach to increasing housing delivery.

Our interviewees also mentioned hurdles arising from planning law itself. There is flexibility in UK planning and licensing rules: when repurposing a building, permitted development often allows commercial to residential conversion without planning consent, and local authorities that seek to encourage meanwhile activity can grant temporary planning or licensing consent for uses that will be in place for a few years only. But use classes, which define what type of activity is allowed on specific sites or buildings, are hindering meanwhile activity: it is difficult to ask permission for an as-yet-undefined use. We talked to public sector planners who were themselves frustrated by how rigidly the planning system treats meanwhile use:

“There is an issue with the planning side. When trying to develop a large-scale meanwhile strategy, it was one of the big stumbling blocks. There were dozens of different uses, every one needed a planning application. Think of very local entrepreneurs – it definitely put them off.”

Head of Planning, a London planning authority

Whilst repurposing buildings can often be done without planning permission, getting planning permission for new temporary buildings is difficult, because schemes are held to the same standard, and go through the same process as permanent buildings. This was mentioned by several interviewees, including the Financial Director of a London university:

“Right now it is harder, longer, more complicated to get planning permission for meanwhile use than for a permanent building. You’re expected to deliver benefits of permanent development while you’re also extremely time-sensitive.”

Financial Director, London university

Licensing is also a barrier for the meanwhile uses that need evening or late-night licenses. One meanwhile operator argued that more “flexibility and common sense” was needed to shake up the rigid licensing system. Like planning applications, meanwhile use operators must still go through the standard licensing process, which can delay the implementation of meanwhile uses. Temporary events licences last for seven days, meaning that all meanwhile uses need a permanent licence, which can be a lot tougher to obtain in some parts of London.

A further issue relates to leases. For sites that are under-used rather than vacant, current lease agreements do not allow tenants to sublet their slack commercial space without landlord consent – this an issue especially in parts of the city where demand for commercial space has weakened. ⁴² Indeed, it is nearly impossible for a building manager to set up short-term leases for smaller units within floors or buildings, and landlords are unwilling to sublet below market values, for fear that accommodating a sub-market element will cause an overall drop in the value of the space. Increasing the flexibility of commercial leases will be a growing issue given changing demands on London’s office and retail space. ⁴³, ⁴⁴

Market immaturity

Compared to other property and development markets, the meanwhile sector is new and evolving, with only a small number of brokers and operators. To realise the potential of meanwhile use, there will need to be larger meanwhile space operators in London, who can assemble and manage a portfolio of sites.

We asked providers and operators of meanwhile space about what is hindering their growth. Their role, resembling that of a broker, is the most difficult: they have to identify assets, persuade landowners to open up their land to meanwhile activity, carry the risk of investment, break even over an unknown time period, and manage relationships with tenants and users, local authorities and neighbouring communities. A meanwhile operator mentioned how risky their last project was:

“The investment for this site was £400k, and we had to start work with no security that the lease would be going ahead.”

Director, meanwhile use operator

A high-quality broker can be the difference between a meanwhile opportunity getting off the ground, and it just remaining an idea.

Larger meanwhile operators can balance cashflow and risk across a portfolio of sites. While the property guardianship sector has matured in that way, ⁴⁵ other meanwhile spaces are most likely managed by small operators that work across a few sites – and often only one at a time. This means that finding space and tenants is reactive and stop-start, which in turn constrains their activities’ legacy: while the meanwhile offer is inherently temporary, most schemes aim to have a lasting impact, but without a portfolio of sites to move onto, impact and revenue can quickly ebb away.

Meanwhile operators also spend considerable time scouting for new sites. Information on empty commercial units is particularly difficult to access. London local authorities have intelligence about empty commercial units (since these are not liable for business rates), but they record it in different ways, some do not record it at all ⁴⁶, and those that do are holding back information. As of June 2018, only the London Borough of Barnet publishes this data on a regular basis.

Tax incentives

The property tax regime also limits the growth of non-residential meanwhile use. Currently, meanwhile activities are liable for business rates if the space they occupy was previously liable for business rates, regardless of whether the meanwhile activity is a business or not. Not only is this a disincentive to providing non-market meanwhile uses – such as an exhibition or community space, we also found that for many meanwhile projects, the business rates bill has become the main operational cost.

The system has perverse outcomes: by demolishing a commercial building early, landlords can stop paying business rates, rather than giving the building over to meanwhile activity. Alternatively, many choose to install property guardians, making the building liable to council tax, which is up to 99 per cent lower than business rates.

Together, these hurdles are preventing a wider uptake of meanwhile use across the capital. There is a role for policy in incentivising the capital’s landowners to make more of the opportunity of London’s slack space, but also in making meanwhile activity easier to achieve. The last section offers a list of actions to scale up meanwhile use in London.