Retail to Resi

Boris Johnson has pledged £5bn to "build, build, build" to help boost the economy and increase new housing supply, making it easier to convert redundant commercial space to residential housing.

But is this the solution to the challenges faced by town centres?

With the amount of vacant retail space set to increase, retail conversions could help solve the shortage of housing supply. However, the situation is not as clear cut as it would appear.

Desirable locations
For any development to progress, it needs to be financially viable. As such, prime locations, with higher residential values are more attractive for potential developers, while towns and cities with a vibrant retail and leisure offer will be appealing to potential residents.

John Lewis's proposal to convert their former store in Birmingham (seen above) is a good example of this: a prime city centre location with a good quality retail offer and excellent transport links on the doorstep.

In contrast, in the same way that a town centre with significant vacant space is less attractive to potential retail and leisure occupiers, it is unlikely to be a desirable location for potential residents which will drive down residential values. To stand a greater chance of being successful, any redevelopment should sit alongside wider regeneration to support an appropriate commercial offer alongside communal space and facilities.

Format and configuration
Another issue around converting redundant retail space to housing is that without wholescale redevelopment the floor to ceiling heights of retail units do not naturally lend themselves to residential, limiting the number of residential units that can be created.

Alongside this, older buildings may have issues such as asbestos that need to be addressed before they can be repurposed, adding to the cost of redevelopment and making it more difficult to make the development financially viable.

One way to overcome some of these challenges is to add residential units as part of a wider development, rather than converting unsuitable space. One example of this is Woking town centre where Moyallen Group, the owners of Victoria Square shopping centre, have entered into a joint venture with Woking Borough Council to develop two residential tower blocks which will contain 400 high specification apartments alongside a hotel, a new car park, a medical centre and two public squares.

Quality control
The permitted development rights already applied to office buildings has resulted in some high quality housing, highly appropriate to its target residents.

However, there are also examples where the same level of investment has not been made. A recent Guardian article highlighted developments where offices had been converted to social housing, with no access to wider amenities and small units with no external windows contributing to wider social issues.

While town centre developments won't have the same issues around amenities and transport links, the Royal Institute of British Architect's warning that the plans to extend permitted development rights will produce tiny "sub-standard homes" should be a key consideration for developers, and for local authorities.

Benefit to the wider town centre
Bringing additional residents to a town centre will help generate additional turnover for occupiers. However, this needs to be taken in the context of the quantum of additional spend that would be available.

For example, if 500 residential units are developed, a typical household size of 1.8 would bring 900 new residents to the town centre with an average annual non-grocery spend of £4.5m. Even if they committed all of this spend to retailers on their doorstep, as a rough estimate, this would sustain just c.15 k sq. ft of retail space, which would not have the transformative effect that town centres may be expecting.

In summary, while it should continue to be the aspiration to bring new housing to town centres it will not be a quick fix for ailing high streets but needs to form part of a wider masterplan alongside wider repurposing to bring alternative uses into town centres.

Sam Fox