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7 Schemes Showing Dead Retail Space Can Be Turned Into Something New

The UK has about 75M SF of void retail space. Retail property owners think we have between 40% and 70% too much retail space in the UK.

Those are the sobering headline figures from a new report, Re-Imaging Retail, from retail body Revo and broker Savills. It is one of the most in-depth reports yet into how retail owners are dealing with the vast swathes of obsolete space they own, rendered unprofitable by changes in consumer habits.

The good news is, the repurposing of space necessary to make it fit for purpose is now well underway. According to a survey in the report, 75% of landlords are now considering some sort of repurposing project, with leisure, food and beverage, and residential the most popular alternative uses.

Here are seven innovative UK projects and landlords that have sought to take retail space and turn it into something new.

Kommune Castle

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The Kommune food hall in Sheffield

Northpoint Developments had a problem that is becoming increasingly common in the world of retail. It owned an iconic five-storey department store in Sheffield previously occupied by the Co-op. At 80K SF, it was a big chunk of space to fill in an area of the city in decline.

Northpoint was awarded public funding to deliver tech and digital-based incubation in the upper floors of the building, but still had the challenge of convincing people this was a place to locate. Kollider Social agreed to take a lease of the ground floor of the building and to create a multi-use space based around a food hall concept. Kollider Social is a JV collaboration of the local restaurateurs behind Tamper/Depot Bakery/Peddler Street Food Markets. The 18K SF concept, called Kommune, is occupied by eight independent food traders, a bakery, coffee and a bar, in addition to a craft beer seller, a bookshop, a contemporary art gallery, a health and wellbeing studio, a pop-up cinema and events spaces.

At a micro commercial level, Kommune has helped increase the pace of lettings within the remaining building, Northpoint said. It is now the home of the National Video Games Museum, a 300-seat event space known as Ko Host, a coworking space in partnership with Barclays Eagle Labs, and the UK HQ for a U.S. tech giant.

Department Stores Become Competitive Leisure Hubs

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Swingers' Oxford Street location

As well as what Northpoint is doing in Sheffield, there are numerous examples across the country where landlords are converting vacant department stores. Leisure is at the heart of this, including the growing trend of competitive socialising. Examples include the House of Fraser unit on Princes Street, Edinburgh, being repurposed into the National Whisky Museum for Scotland; the House of Fraser Unit at Highcross Shopping Centre in Leicester [in part] into Treetops Golf; and mini golf and bar operator Swingers and food hall operator Market Halls taking space in the former and prominent BHS unit by Oxford Circus. These operators and their landlords are taking advantage of the large amount of space available in high profile prime locations that already have high footfall.

Elsewhere, Sovereign Centros recently let part of the former BHS space in Telford Shopping Centre to Inflata Nation. The deal sees 23K SF of the old retail anchor space being transformed into an inflatable activity park, providing gladiator podiums, ball pits, slides and climbing walls.
 
Stretford Mall And The Fresh Food Revival

Stretford Mall was one of the struggling centres bought by private equity during this cycle, and it is owned and managed by Apollo and M&M Asset Management. A new concept at the mall is looking to combine the convenience retail theme, with centres anchored by grocery retails and fresh food markets.

Growing grocery retailer Simply Fresh recently opened the prototype of its food hall stores in the mall near Manchester. Stretford Mall has suffered historically due to a high void rate, and the owners are seeking a range of both retail and non-retail uses to revitalise the centre. At 5,700 SF, SimplyFresh Foodhall Stretford houses a grocery store, three food vendor kitchens, and a craft beer and coffee bar with a florist and communal seating. The food vendors are rotated regularly for vibrancy and serve authentic street food for breakfast, lunch and dinner to consistently provide higher footfall throughout the whole day. Demand for seating has led to further expansion plans. The grocery store offers a diverse range of products from artisanal to ethnic, whilst ensuring that farm favourites are not forgotten.

“The key to being able to reactivate shopper engagement in challenged retail areas is to have a genuine care for the community and to engage and listen to what is important to your customers,” Simply Fresh Creative Director Davinder Jheeta said.

Ellandi’s Digital Drive

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The Digital Retail Innovation Centre at the Eastgate Shopping Centre in Gloucester.

Shopping centre investor Ellandi is proving that converting retail to workspace for digital companies and new tech incubators will not be solely a London phenomenon.

The company has created space for the UK’s first Digital Retail Innovation Centre at the Eastgate Shopping Centre in Gloucester, working in partnership with GFirst LEP, Gloucester City Council and Marketing Gloucester. This is the first hub of its kind designed to support retail entrepreneurship through the development of the Digital High St Lab to foster innovation and incubation of new retail businesses supporting retailers adapt in an age of rapid digital innovation. If it is successful, it will help incubate the companies that will make sure retail property can truly embrace the digital age.

At the Marlands Shopping Centre in Southhampton, the previously vacant second floor area that had been occupied by Matalan has been repurposed into the city’s first coworking environment and Barclay’s 24th UK Eagle Lab.

The provision of flexible working space in unused retail space has created a crucial hub for those not working from a fixed office. This provides a different reason for people to visit their local high street and shopping centre, away from the traditional retail and food court visits, Ellandi said. Attracting flexible workers increases footfall at the Marlands and encourages spend in nearby stores.

Intu, Unibail And The Retail Revolution

In the report, Savills weighed the potential of converting dead retail space to new homes. It said this won’t work across the country: In some areas, the cost per square foot of knocking down retail and building residential is higher than the price at which new homes could be sold. Unsurprisingly, places where such conversions are viable are clustered in the south of England or major cities.

However, it is possible, and Savills said it is advising on the repurposing of 17 acres of retail warehousing into new residential. Startup company Vivahouse is looking to use off-site construction methods to convert retail space to residential, reducing the cost for owners and making repurposing more viable.

Major landlords like Intu and Unibail-Rodamco-Westfield are taking extensions to schemes that might once have been earmarked for new retail, and using it to build homes for rent. Unibail is building 1,200 private rented sector homes at Westfield Stratford, and Intu is building 1,000 rental units on underused car parking land at its Lakeside shopping centre in Essex.

Retirement Living — Demographic Determinism

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L&G's Guild Living scheme in Bath.

With its Guild Living retirement living concept, pension fund L&G is looking to capitalise on two trends at the same time: the ageing population and the growing obsolescence of some retail space. Two of Guild Living’s schemes, in Bath and Walton-on-Thames, are perfect examples. Both are redeveloping centrally located retail warehouses into circa 300-unit later living communities. Comprising one-, two- and three-bedroom residences and care suites, the developments incorporate age-friendly restaurants, wellness centres and retail. They are not traditional, gated residential blocks, but extensions of the existing local community, focused on vibrancy, intergenerational activity and social interaction.

Blackstone’s Leisure Makeover

As the survey of landlords discovered, leisure and food and beverage are the most popular choice when repurposing retail space. The St Enoch centre, owned by Blackstone, is the largest shopping centre in Glasgow, but has always suffered with a weak second anchor store in BHS. This is now changing with the redevelopment of the former 90K SF BHS store into a leisure hub with a nine-screen Vue cinema and eight restaurants. Opening 2020, this complex development will try to completely reanchor the centre’s upper mall, linking with a newly refurbished food court and making it the dominant F&B location for the city centre. Other leisure uses are also being incorporated which will look to further enhance the centre’s appeal and lengthen dwell time. On the Argyle Street frontage, planning consent has been obtained for the refurbishment and reconfiguration of an outdated, poorly configured block to provide modern space for six new occupiers.