A lack of quality office space in the centre of York could eventually force businesses to locate in other cities, says LSH.

The strength of the residential market has seen landlords convert office space to apartments under Permitted Development Rights (PDR), which has significantly diminished the available stock in the heart of the city.

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.

“PDR has seen the conversion of significant amounts of commercial stock since its introduction in 2013but the problem is particularly acute in York,” said Adam.

Over 200,000 sq ft of commercial space has been converted to residential in York in the past two years, including three sizeable buildings which would have suited a major corporate occupier.

He added: “It was no surprise that last year York came out top of LSH’s Vitality Index as the most investable city in the north with its high quality amenities, an excellent university and educated workforce, and that is driving the residential market.

“This means that the return for landlords by converting to residential is significantly greater than retaining as commercial space and, at present, there is very little in the pipeline to replace the space that is being lost.

“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.”