Are Landlords Getting The Full Potential From Their Sites?
27th September 2021
BRM Real Estate Director, James Alger discusses repurposing premises.
With the pandemic having accelerated changes to the demands and needs of tenants and occupiers in UK city centres, many landlords are exploring the repurposing of their empty premises.
Repurposing buildings rather than leaving them empty can provide a solution to the ever-growing number of empty properties and is a huge opportunity for all property owners.
In theory, this would seem to present an easy route to re-let and get rent flowing back in but is it that simple?
This route will provide landlords with numerous challenges and hurdles to consider.
Several of the properties that are ideal for repurposing are department stores. A recent high profile example of this is John Lewis in Sheffield City centre. The size of these buildings lead to the first thought of turning that tired and vacant department store into luxury apartments or student flats.
This would appear to fit the bill but a question to consider is whether the property subject is to covenants restricting its use or requiring third party consent for changes to use or the building, these covenants may prevent the building from being used in that way.
This is particularly pertinent for leasehold properties and landlords should ensure this is considered by their legal advisers at an early stage.
Another angle for landlords to consider is the public reaction and potential PR outcry of repurposing a building with historic meaning or a popular department store making way for discount and charity shops. This may not immediately find favour amongst shoppers and other city centre stakeholders even if it could open rental streams quickly.
Sheffield’s now vacant Debenhams store was recently proposed as a city centre hospital, an idea which prompted local discussion and won a prestigious economics prize.
Landlords also must consider the type of use and whether repurposing a large space into a single-use is a better option as a landlord. Increasingly the bigger city centre conversion projects will involve elements of residential, leisure, retail, and high spec office use. Landlords should liaise with their planning consultants and commercial real estate agents to explore the true potential of their sites.
On the flip side, repurposing may appear an obvious solution but is likely to be an expensive and time-consuming exercise. With high demand for city-centre living accommodation, these types of property will be highly sought after and a sale with subsequent reinvestment outside of the urban landscape may present more accessible growth opportunities.
As city centres evolve, clear strategies emerge. Landlords and their advisors should speak to local authorities and city stakeholders to get a feel for their long-term vision and establish how their vacant buildings could form part of it.