Applications to convert UK high street shops into living accommodation went up by 37% in 2020/21, but according to research from the law firm EMW, councils rejected nearly half of developers’ conversion plans.

A world-wide issue

Recent research by international property agents Savills indicates that there’s far too much retail space in the world.

The USA, it is estimated, has twice as much square footage in shopping centres per capita than the rest of the world, and six times as much space as countries in Europe. Savills thinks that more than one-third of shopping malls in the USA will have to close and that likewise the UK may be ‘over spaced’ for retail by as much as 40%.

The rise in the popularity of internet purchasing and home delivery would suggest that the problem of redundant retail space in many towns is likely to get worse not better. Covid-19 has resulted in an acceleration of the trend with inflation and the cost-of-living crisis adding further to the retailers’ woes.

Changing consumer priorities

A higher proportion of discretionary spend is now going on leisure experiences rather than discretionary purchases, which will have a knock-on effect to the way people shop and therefore the amount of retail space needed in the future.

The solution to much of the problem of dying town centres, according to Savills, would seem obvious: too much retail space means conversion to other uses.

Bringing back life into urban centres with retail to residential conversions – repurposing as it has become known – can be an effective strategy in turning around the decline and increasing consumer footfall. Converting space into leisure attractions, rebuilding town centres with residential as well as office space, means that towns centres, cities centres and shopping malls can be revitalised.

The most successful projects says Savills, “are those that emphasise social value, taking a whole-place perspective that includes social spaces, ‘blended living’ and offering convenience for people keen to minimise travel.”

The most successful re-purposing developments to-date appear to be from those landlords who are willing to adapt their financial and asset models to mixed-use – retail-office-leisure-residential – while combined with long-term sustainable development. Many older properties need to be upgraded to meet the new environmental standards in any case, so there’s a good opportunity to re-purpose as well.

Conflicting priorities

Local planning priorities are perhaps quite rightly slow to change and adapt, to ensure that these changes are appropriate for individual locations, long-term. But planners and developers need to work together to ensure that local priorities are met at pace, otherwise enthusiasm and investment will simply wither away. With almost half (45%) of all change of use applications rejected by local authorities, discouragement it seems is winning the day.

What’s more, recent Government plans for town centres and retail shops are to force landlords to let-out their shops – those vacant for six months or more – to be auctioned off to the highest bidder.

EMW principal Marco Mauro is reported as saying:

“Some local authorities are hesitant about losing too much commercial space. If too many shops are lost, the value of a high street as a destination is eroded, often permanently.”

High street shop units are increasingly being targeted for conversion into homes, but as Mauro points out, many councils are fearful their areas may become simply “dormitories” turning shoppers away.

While on average nearly 15% of high street retail units remain vacant, and in some towns that figure can be well more than double, action is clearly desperately needed. It is unlikely that much of the vacant retail space in some locations will ever be taken up commercially again, so that sad fact has to be faced up to.

Mauro points out that developers stand more chance of winning planning approval if they proposed mixed-use developments rather than concentrating solely residential schemes.

His advice to developers is to go for mixed-use developments rather than these solely residential projects, which have greater appeal for local planners.

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