Consequently, there is now more vacant space in the most in-demand housing markets than ever before. A new report from Turley, a planning and development consultancy, lays bare the scale of land from which retail has retreated.
The Making Sense of Mixed-Use Town Centres report shows that there is around eight million square kilometres of unused space in UK. If we were to use a third of that space for residential homes, Turley predicts that we could build 45,000 new homes in order to help address the housing crisis.
Richard Laming, head of economics at Turley, said of the report: “Securing the future of our town centres is a critical national issue and one that is rightly getting a lot of attention. These centres are vital to residents, communities and businesses alike and are engines of economic growth. It is vital that these areas are allowed to evolve and that the planning system is match fit to support this.”
This change began in the 1980s with the advent of supermarkets and out-of-town retail and leisure parks which could provide services at sizes which could not be implemented on traditional town or city centre high streets. Floorspace was all important, and concerns about traditions and local providers took a back seat.
These new super-large occupiers committed to long term leases in parts of town which were previously seen as unfashionable. A willingness to invest and build huge shopping centres on disused brownfield sites earned the approval of local councils which were keen to facilitate this. As the shops grew larger, economies of scale took over and products could be offered at price levels which the high street could not compete with – and, eventually, high streets began to die.
Later, competition from the internet would exacerbate and cement this trend, and hundreds of shops were closed down and have been left vacant. This has left a lot of space to be filled at the exact same time as city centre populations are booming. Consequently, many are beginning to wonder whether all the empty retail space might be put to better use as residential accommodation.
A look at the biggest Northern city centres helps to illustrate the evolution of the high street. Between 2002 and 2015 Manchester, Leeds and Liverpool saw growth in their city centre populations of 149%, 151% and 189% respectively, according to the Centre for Cities. That is a lot of extra people, and all projections for those cities see the pattern continuing.
There is nowhere near enough available rental accommodation for these growing populations. Rents and house prices are being pushed up as the supply crisis deepens, and it is doubtful that an additional 45,000 homes across the country will change that fact. Instead, that number of homes over an unspecified time period will more closely resemble a drop in the ocean. The market will remain largely unchanged overall.
This is good news for investors in the short, medium and long term. City centres are changing, but even if retail spaces are changed into residential accommodation the pace of population growth means that there will still be nowhere near enough homes for everyone who wants to live there. Until that changes, investing in UK city centre property will remain one of the best options for investors from around the world.
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