Why transforming unused retail into homes will be good for retail
In towns and cities across the UK, boarded up and to-let signs over empty retail units are a common site, with commercial property company Evolve Estates putting the figure at a staggering 158 million sq ft of vacant ground floor retail space in the UK.
Sebastian McDonald-Hall, director of Evolve Estates, which part of the LCP group of managed companies, is calling on the government to radically rethink how to transform underused retail units in struggling town centres into homes.
The provision of Gap funding of up to £50,000 per unit – depending on local residential values – would, he suggests, help to deliver much-needed homes within struggling high streets and desolate towns, whilst helping to protect the green belt.
“Introducing Gap funding isn’t just pandering to the two-dimensional needs of a housing developer,” he says. “The opportunity is far more wide ranging than that. There is already a 5% only VAT charge on conversions to residential and it’s nil on new build.
“What would be beneficial is the same reduction on existing flat refurbishments where vacant derelict flats are brought back into use. It could apply where flats have been unoccupied for a period of more than two years due to their poor state.”
McDonald-Hall says puts forward a criteria for applying for Gap grant funding, requiring architectural plans to be drawn up, planning consent obtained, and flats worth only £80,000 or below permitted to apply. It should, he continues, be targeted at areas with a certain statistical demographic, where the grant will benefit the most in need areas and people, and that Gap funding money would only be released to applicants upon receipt of a completed residential unit and all building regulatory documents and sign off.
Evolve Estates has also been working on a design code with Create Streets, the social enterprise and independent research institute, to present to the government and Homes England that would free up some funding earmarked for new builds to be given to retrofitting retail spaces into residential homes.
McDonald-Hall believes that if part of Homes England’s funding was given to converting existing ancillary space, the same amount of affordable homes could be created for half the tax payers’ money: “This would not only save money, reduce the carbon footprint and bring vitality back to areas of the country that are suffering, but create jobs and protect the precious green belt.”
In terms of convertible space there is, he approximates, 670 million sq ft of retail space located in basements and upper floors, which the standard supply statistics do not account for, plus 308 million sq ft of retail which will no longer be required by the end of the decade – increasing to 492 million sq ft by 2040 –equating to well over a billion square foot.
“Ground floor retail vacancy is sufficient to support delivery of 147,000 homes,” says McDonald-Hall. “If ancillary space above ground floor retail places is also repurposed, there is the potential to build more than 450,000 homes. By 2030 almost 725,000 homes could be built within the existing urban infrastructure, increasing to 915,000 homes by 2040.
“Whilst the scale of vacant or underused floorspace may seem daunting, it provides a significant opportunity to create new and long term sustainable communities,” he adds. “Where LCP has converted retail ancillary to residential, it has seen an improvement in previous problems such as social issues, retail vacancies and community spirit.”
This was first published in Retail Destination Fortnightly. Click here to subscribe.