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From retail to resi - two birds with one stone?

3 MIN READSeptember 18, 2019

There may be a way to deal with the UK’s two real estate market problems - high street retail and residential - with one solution. Some market analysts have suggested converting failing retail space into much needed residential, but would this ubiquitously work in such an economically fragmented country?

The UK press have been asserting the ‘death of the high street’ for quite some time. The rise of internet shopping paired with the shutting down of beloved brands such as Woolworths or Blockbuster has kept the trend in the public eye since the early 2000s. However, as some industry leaders have said in interviews on the GRI Hub, recently including Dilip Khullar and Paolo Magnaschi, physical retail will always be relevant; contrary to ‘death’ which suggests a complete termination of all high streets. 

This would indicate retail is perhaps going through, more accurately, the ‘evolution of the high street’ as it works towards fighting the wave of e-commerce. But what is the next stage of evolution? The solution may lie with one that would simultaneously benefit the UK housing market. By converting retail into residential, it would not only satisfy a desperate need for housing and convenient living, but also provide retailers with much needed liquidity.

Sounds great, but the reality is that each town across the UK can be wildly different to the next, and is affected heavily by prevailing political views, culture, socio-economics and average incomes along with many others. A one-size-fits-all approach may not work.

While it may sound great and eventually become profitable, the execution requires long term planning and such a big short-term dent in capital returns that most would see it as not worth the risk. To conclude, the repurposing of retail to resi may be an extremely valuable concept to some, but won’t work everywhere and is very situational.

 

For further discussion on new trends in residential, join some of Europe’s most senior real estate heads at GRI Residential Europe 2019, taking place in London on 26-27 November. 

Article by Matt Harris

 
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