How Small-Scale Property Development Is Rejuvenating Our Town Centres
There was a time just a few short decades ago when a shopping trip into town might see you pop into the greengrocers, fishmongers, butchers, and grocery store for your weekly shop. Back then, supermarkets were still located in the centre of town, and the concept of Ocado would have seemed about as realistic as bumping into the Jetsons (look them up). Roll the clock forward to today, and the same trip is all but unrecognisable. If they’re still standing, those very same buildings now house coffee chain outlets, vape stores, and charity shops instead. And the vibrant, beating hearts of our town centres have long since withered on the vine.
A single meteor strike saw off the dinosaurs, but it took two strikes to seal the fate of the UK’s high streets. First came the advent of the out-of-town supermarkets. All those sprawling aisles of grocery goodness stretching out as far as the eye could see. It also meant the end of negotiating smelly multi-storeys or hunting around for that elusive nearby parking spot. Just acres of spaces situated right outside the shop, with trolley parks on the side for good measure. Suddenly convenience and choice were all under one roof, and our trips to the high street became monthly instead of weekly.
As the decades rolled by, so the second blow arrived; the irresistible yet insidious internet. We may still have preferred to get our consumables from supermarkets, but for everything else, we became primed to have whatever we needed delivered directly to our doorstep within a couple of clicks. Our monthly trips into town had now become entirely non-essential. We no longer needed them. In fact, we no longer needed the high street. We just needed bigger recycling bins for all the new cardboard in our lives.
The result of this double whammy was as predictable as it was depressing. Without the fuel of regular customers, stores and businesses shut down, and lower rent operators took up the empty prime retail space. Great if you wanted to grab a flat white, pick up some vape juice or rummage through some pre-owned clothes for a bargain. But as a destination, it lacked the appeal or necessity to draw us in. As the downward spiral continued, more stores disappeared for good. Low rent became no rent, and the soul of these places disappeared.
Which all sounds rather depressing. So, are we now totally reconciled to the fact that our towns are in terminal decline, or are there any hopes of recovery? Let me share a cunning plan that could see a quite spectacular turnaround. But first, just to cheer you up, let me tell you about another crisis that’s been brewing for almost as long as the high street’s been on the wane. And it concerns the rather sensitive subject of housing.
You may have already heard that we’re currently in a housing crisis. If you can remember the housing crisis that existed thirty or so years ago, you’ll be pleased to know it’s the same one. Things haven’t moved on much.
According to the government, we need to be building 300,000 new homes every year. This is a rather abstract figure, so to put it into context, that’s more than the number of homes in Oxfordshire or Worcestershire. In other words, we need to be building a new county’s worth of homes every year.
And when you look at the map, it’s pretty obvious where we should build these new counties. There’s bags of room north of Edinburgh, and central Wales also has plenty of space. You could probably even squeeze something into north Cornwall if everyone budged up a bit. However, having the space to build is not the only prerequisite. You need infrastructure. You need jobs to which people can commute. You need homes near where people are from and where they want to live rather than attempting a resettlement programme. And this means trying to squeeze new homes into parts of the country that already have quite a lot of housing, even if it’s not enough.
The problem here is that most people think that building new homes is a fantastic idea; they just don’t want them built anywhere near them. This does not make them bad people – just imagine how thrilled you’d be to find a new housing estate going up at the bottom of your garden. But it causes a big problem for the government because these people have votes. And as we saw in Chesham and Amersham recently, seats can be lost if the locals don’t like the cut of a planning policy’s jib. We’ve had 11 housing ministers in 12 years, which suggests that Westminster views the housing problem as either unimportant or unsolvable, neither of which is a good look if you’re trying to get on the housing ladder.
So, we currently have two separate crises: a chronic housing shortage and a high street in terminal decline. But there’s a place where these two worlds collide. The death of the high street has led to a significant number of commercial buildings such as shops and offices becoming redundant. There is now a massive volume of unused brownfield land – land that has been previously developed – available across the country. The CPRE recently estimated that there are enough brownfield sites to accommodate 1.3 million new homes. This, too, is an abstract number until you realise it equates to over four years’ worth of new homes. Yes, we have over four counties’ worth of housing sitting untapped on unused, previously developed land.
Here’s the theory. If we could convert some of the commercial properties in our towns into residential, we would increase the number of people living there. With new inhabitants in towns comes the need for more amenities. These new homeowners would not be able to survive on cappuccinos, vaping products, and second-hand trousers alone. They will need shops. They will need bars and cafes, and restaurants. They will need entertainment and recreational venues and outdoor amenities. And these things will all automatically materialise because the demand is there from the new homeowners.
But it doesn’t stop there. Suddenly those people in the outer suburbs with their recent cardboard recycling issues have a new reason to come into town. They could pop into one of those new restaurants after visiting the new cinema and then catch last orders in one of the swanky new bars. And swing by the recycling centre on the way home to ditch their cardboard. Now we have residents from out of town coming in for leisure, which again creates demand. What about those old redundant department stores in the high street? They could become co-retail spaces, where small independent retailers could rent space to sell their wares. We could actually go shopping again on the high street, but this time for the more exciting stuff you can’t get in Tesco or Amazon. Believe it or not, we could even start to see tourism.
So, while this is all easier said than done, it’s still fair to say that Brownfield redevelopment has a lot going for it. First and foremost, it means we’re not concreting over the green belt. It’s a vote-winner, too, since fewer voters would object to empty buildings being recycled into homes, or to our town centres being given new leases of life. These buildings are surrounded by infrastructure, so there’s no need to undertake massive civil engineering projects to make them accessible. And they’re also in the middle of communities where people want to live – there would be no need for everyone to up sticks and relocate to the Western Isles or Mid-Glamorgan. North Cornwall could also breathe a sigh of relief.
Much of this brownfield land is in towns, where the retail revolution has had an interesting impact on our shops. Back in the day, the upper floors of shops would store stock. But with today’s just-in-time inventory systems, retailers no longer need the same level of storage space, and the ‘uppers’ of many shops are often unused. This makes it possible to convert these upper floors into residential use without making the store underneath unviable.
So, you may well be thinking why our high streets are not currently a sea of bobbing hard hats. Surely with so many benefits to brownfield development, the major housebuilders of the land would be clamouring to build, build, build. The problem is that large housebuilders have a specific business model that is not aligned with brownfield development. It’s a numbers game. Visit any large new housing development, and you’ll be given a brochure where you can choose from the Bramley 4-bed detached, the Churchill 3-bed semi, and the Westminster 2-bed townhouse, to name but a few. These are cookie-cutter homes, well-designed blueprints that can be plopped on any piece of virgin land anywhere in the country. The plans and drawings already exist, and the team knows how to build them. The only decision needed is which designs are going in which field.
Give these housebuilders an old commercial building to convert, and the wheels quickly fall off the bus. They would need to design a bespoke solution. The team isn’t experienced in converting buildings, particularly as they will have to deal with the constraints of the existing structure. Oh, and there’s the small matter of profits since converting a small building into flats produces only a fraction of the profits a new greenfield housing development would deliver. In short, housebuilders don’t want to build on brownfield land because it’s too tricky, they lack the skills to do it, and it doesn’t make enough profit.
So, who on earth is going to provide the solution? Say hello to the unlikely superhero of this story, the small-scale property developer. These are not your average established developers but are much more likely to be individuals looking to get into property and not unreasonably feeling that the usual buy-to-let proposition isn’t as attractive as it once was. They are often existing landlords looking to grow their portfolios more quickly by generating regular lumps of cash. The beauty of this type of development is that you can afford to be relatively hands-off – unlike a flip, where the profits are substantially less, and you also invariably end up project managing things yourself. But with a small-scale development, you have the budget to hire a project manager, whose fee is paid for by the development finance. And this can make life a whole lot easier.
And while the government has done its level best to make becoming a landlord as unattractive as possible over the last few years, conversely, it’s gone out of its way to encourage people to become property developers. By putting in place an unprecedented number of new permitted development rights, it has now allowed many different types of commercial buildings to be converted into residential use without the need for full planning permission. This reduces the planning risks involved in undertaking a conversion project and can dramatically reduce the time it takes to complete one. Small-scale projects can usually be completed in 12-24 months, and most are capable of producing a healthy six-figure profit. Not enough to tempt the bigger developers, but a highly attractive proposition for would-be or existing landlords and property investors looking to take advantage of the current glut of convertible buildings.
It’s this promise of more profit for less work that’s tempting more and more people to consider small-scale property development as an investment strategy. Whether it will be enough to change the fortunes of the country’s towns and high streets remains to be seen. But as cunning plans go, it has a lot going for it, providing we continue to give every incentive to the new breed of small-scale developer who’s willing to be part of the solution.