Vape stores, charity shops and to let signs – the state of our town centres is depressing. Out-of-town supermarkets and internet shopping have been two powerful body blows that have had our high streets reeling. Without the fuel of regular customers, stores and businesses in our centre towns have shut down. But we shouldn’t be totally reconciled to the decline. Not if we go about solving a different crisis at the same time.
Where crises collide
According to the government, we need to build 300,000 new homes every year. To put that number into context, that is more than the number of homes in Oxfordshire or Worcestershire. In essence, we need to be building a new county’s worth of homes every year.
But we don’t just need space. Infrastructure, proximity to jobs, and people not wanting to relocate far from family and friends are all considerations. And this means trying to squeeze new homes into parts of the country that already have quite a lot of housing.
The high street decline has led to a significant number of commercial buildings e.g. shops and offices becoming redundant. If we could convert some of the commercial properties in our towns into residential, we’d increase the number of people living there. With new inhabitants in towns comes the need for more amenities. 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.
Advantages
Brownfield redevelopment has a lot going for it. First and foremost, it means we’re not concreting over the green belt. It is a vote-winner too, since few 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 areas that currently have lower populations.
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.
Small-scale is key
So, why are our high streets not currently a sea of hard hats? The problem is that large housebuilders have a specific business model: cookie-cutter homes with well-designed blueprints that can be plonked 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. They aren’t experienced in converting buildings, and there isn’t enough money involved: converting a small building into flats produces only a fraction of the profits a new greenfield housing development would deliver.
The solution? Small-scale property developers.
These mostly fall into two categories: individuals looking to get into property but put off by the usual buy-to-let proposition being less attractive than it once was; 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 be relatively hands-off – unlike a flip, where the profits are substantially less, and you also invariably end up project managing yourself. With a small-scale development, you have the budget to hire a project manager, whose fee is paid for by the development finance. This can make life a whole lot easier.
Small-scale projects can usually be completed in 12-24 months, and most are capable of producing a healthy six-figure profit. That is not enough to tempt 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. And properly supporting these projects could help change the fortunes of the country’s town centres and high streets.
By Ritchie Clapson CEng MIStructE, propertyCEO
ABOUT THE AUTHOR
Ritchie Clapson CEng MIStructE is a veteran property developer of almost 40 years and co-founder of propertyCEO, a nationwide property development training company that helps people create a successful property development business in their spare time.
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