Cities play three important roles. They are places of production, places of consumption and places to live. These competing demands create competition for how space is used. This is particularly the case in city centres, where the benefits of proximity have led to a boom in both city centre working and living in places such as Manchester and Leeds in recent years. For policy makers, this urban revival means that increasingly choices and trade-offs have to be made over how to allocate space in these centres.

In making these decisions it is important to understand the relationships between the different roles that cities play. The growth of jobs in many city centres has been driven by the desire of higher-skilled, service-based industries to be located in dense city centres. In turn, by both providing better access to jobs and driving up demand for amenities, such as shops and restaurants, this growth in jobs has sparked a revival in city centre living in successful city centres. But this comes with a risk – give too much land over to residential space and land for commercial space becomes squeezed, with implications for the ability of a city centre economy to continue to grow and create jobs in the future. In turn, this has implications for productivity, wages and prosperity.

Currently national policy risks squeezing the commercial heart of cities. The National Planning Policy Framework and policies such as permitted development rights rightly focus on tackling housing shortages. PDR, in particular, has played an important role in delivering new houses in certain parts of the country, converting disused commercial space into residential use, and has allowed the market to guide these decisions. But it does this by converting commercial space to residential, rather than encouraging new homes to be built. The challenge in city centres is that what may make financial sense for an individual developer may not be the right decision for the city centre as a whole, and could cause a restriction in the commercial space available.

For this reason, policy should be amended to reflect this challenge by allowing city centres to be exempted from PDR conversions and giving them special status in the NPPF. The growing importance of city centres as places of production is not just important to the future of city economies, but to the national economy too. Extending existing exemptions to apply to all city centres will allow a wider view to be taken on the best use of land and property, in order to strike the right balance between commercial and residential development.

It will also be crucial that policy continues to support the role of cities as places to live. This will require both building up and out in our most successful cities. Currently a number of policies, such as conservation areas, London’s protected views and the green belt restrict this, squeezing the amount of new space available and stoking competition between different land uses. A relaxation of these rules at the local and national level that allows densification within cities and strategic development of the greenbelt is needed if we want to both supply the homes we need and ease the pressure on commercial space in the centres of cities.