Significant regeneration projects are poised to transform the Midlands' largest cities – Nottingham, Leicester and Derby – over the next 10 years. Each has a long-term master plan for the regeneration of its city centre, promoted by a special purpose company to ensure the master plan is delivered. Planned developments in the office, retail, residential and leisure sectors in these centres will prompt an exciting surge in commercial property activity over the coming months and years, as investors and end users benefit from high quality development within the region's cities.

The Nottingham city centre master plan sets the strategic spatial framework for the development of the city centre. Some of the specific developments contained in the plan are the redevelopment of Old Market Square, a new Centre for Contemporary Arts and the extensive re-development of the Broadmarsh Shopping Centre by Westfield. In addition, the areas to the south and east of the city centre are specifically targeted to provide enhanced 'gateways' to the city with mixed-use developments featuring offices, flats, shops and cafes.

These developments will re-invigorate the city centre of Nottingham, but will also involve the use of compulsory purchase powers to assist with site assembly, as local authorities acquire land for a particular purpose or scheme in the public interest.

The powers and restraints that accompany a compulsory purchase are complex and governed by legislation, guidance and case law going back to 1845. Reform is overdue. Yet, although the Law Commission has recommended that a single simple code be installed to replace the existing rules, the Government announced at the end of last year that implementing the recommendation "is not a practical proposition for the foreseeable future" as this would still require "substantial further work". It is evident that no quick and easy solutions exist.

In Leicester, a master plan was launched in November 2002 with key projects including the creation of a new business quarter, a new science and technology park, widening the city's retail circuit, creating a new city centre residential community and developing the waterfront with residential and leisure developments. There are also proposals for a cultural quarter and a new Performing Arts Centre. The widening of the retail circuit includes a considerable extension to the Shires Shopping Centre to include retail, leisure and entertainment areas, as well as parking, public transport facilities and a residential element of 118 homes.

Derby's master plan also sets out similar objectives and principles which will guide regeneration of the city and also identifies a number of projects already ongoing that will transform the city centre. Major developments already in the pipeline include Westfield's redevelopment of the Eagle Centre and Riverlights, a mixed-use development by Metroholst, comprising residential, retail, leisure and entertainment with office space.

It is clear that if all of the planned developments are pushed forward, the markets for retail, leisure, office and residential space in Nottingham, Leicester and Derby will be revolutionised. The redevelopment of the Eagle Centre in Derby will double the size of the existing scheme, the Nottingham Broadmarsh Centre redevelopment will provide 46,451 square metres of retail space and the extension of the Shires Centre in Leicester will result in a shopping centre with more than 100,000 square metres of retail space. Yet, despite the opportunities that such regeneration promises to bring, retailers in the region have their own legal challenges to face, as well as operating in a difficult economic climate. Where flexibility and timing is key, retailers will be particularly affected by additional external factors influencing the format of their stores such as the controls on the installation of mezzanines, which from 10 May threaten further delay and administrative cost.

The Town and Country Planning (General Development Procedure) (Amendment) Order does not operate as a total ban on internal alterations (which increase floor space), but is a targeted measure to achieve the Government's objectives to promote the regeneration of town centres, ensuring that out of town retail outlets do not expand without the local authority being able to consider the impact on the local town or city centre. Usually, works affecting only the interior of a building do not require planning permission. This exemption will no longer apply where the proposed works increase the gross floor area of the building by more than 200 square metres and the building is used for the retail sale of goods other than hot food. Specific advice as to the success of a planning application will be needed before considering a proposed mezzanine, bearing in mind relevant national and local planning policies.

The British Retail Consortium (BRC) has pointed out that the applications for planning permission for mezzanines may cause a log-jam in the planning process. The director general of the BRC, Kevin Hawkins, has commented that "to avoid delaying vital development and regeneration projects, the Government must allow local authorities to invest more resources in the planning regime so they have the numbers and quality of staff that will now be needed".

This log-jam may be addressed in part by the introduction of local development orders (LDOs) which also come into operation on 10 May. These are made by local authorities to grant planning permission in advance for certain types of development within a specified area. If an LDO covers the type of development proposed, then there is no need for the developer to apply for an individual planning permission. The Office of the Deputy Prime Minister (ODPM) suggested in the launch of both the introduction of controls on mezzanines and LDOs that local authorities may use LDOs to permit the installation of mezzanines in town and city centre locations and it is hoped the application of LDOs is embraced by local authorities as a means of supporting the strategies for growth incorporated within the master plans.

The Government has highlighted its commitment to the introduction of a planning gain supplement (PGS) in the recent UK budget following a consultation on its proposals which ended in February. Developers will need to be aware that the idea, which was originally suggested in a review of housing supply, has now been extended to all development other than householder projects. The aim of PGS is to capture a portion of the land value uplift created by the grant of planning permission for a development so that the revenue generated will be used to finance infrastructure projects. It is still unclear how much the supplement will be, having been described as "modest" by the Government. Some commentators are suggesting a rate of 20% of the land value uplift, although a dis-count for brownfield development may be considered.

Under the current proposals, developers would be required to self-assess the amount payable and make payment on the commencement of the development. The valuation date will be the date of full planning permission in most cases. Consultation on these proposals ended in February and the PGS is being scrutinised by an ODPM select committee. Various industry bodies have published their responses to the consultation and the British Property Federation's response has stated that "it is not able to lend its support to a set of proposals which it sees as detrimental to the future productivity and growth of the UK property market". English Partner-ships' response was more positive, stating "the PGS offers a real opportunity to ensure new developments go hand-in-hand with the necessary infrastructure to make them truly successful and beneficial to local communities".

The residential element of mixed-use development also carries forward new obligations, the impact of which has not yet fully been assessed. Any development which has a residential element must take into account the cost and administration of providing Home Information Packs (HIPs) with effect from 1 June, 2007. The Government recently published a timeline of the implementation of HIPs and the regulations which will confirm the final details of the scheme are due to be published in June. Commentators are still divided on whether HIPs will be a success and what the impact on the housing market will be.

The East Midlands offers substantial opportunities to be involved in exciting projects and a collaborative approach will deliver the strategic development of the region within the anticipated time scales, bringing future benefits for all stakeholders.

Sean Burke is a partner and national head of Shoosmiths' commercial property team.