Commercial property - repurposing to residential

Published 8 diciembre 2022

In recent news John Lewis has partnered with investment company, Abrdn, to repurpose three of its commercial sites for housing. The sites consist of two Waitrose Stores located in Bromley and West Ealing, as well as a vacant warehouse in Reading. The £500m joint venture seeks to build 1,000 new homes for rent in an attempt to diversify income streams away from retail and establish itself as a substantial residential landlord.

This is a significant shift in direction for the retail giant given its historic business model as a leading omni-channel retailer in the UK. Other retailers will likely follow suit with the likes of Marks & Spencer and Sainsbury’s already investing in commercial repurposing ventures of their own.

Both out of town retail parks and department stores could offer a similar boost to housing figures as we’ve seen with ‘office to residential’ permitted development. Well connected retail sites represent potentially sustainable locations for major new housing or housing-led schemes – without the costly enabling infrastructure of green field sites and this is also in keeping with the Government brownfield first levelling up agenda.

Build-to-rent schemes in particular have attracted increasing attention from investors since Covid and should be welcomed by local authorities in housing supply terms, as they offer relative speed of delivery and higher market absorption when compared with typical plotted schemes. Adding to that the significant investment and partnering opportunities between retail funds and house-builders, we believe that asset repurposing will make a significant contribution to new housing.

DAC Beachcroft are experts in the residential development sector and are able to advise on any repurposing proposal.