It has been talked about for a few years now: converting underused retail assets to much-needed residential. Now, it is starting to happen.

Several schemes are underway that will see retail parks knocked down and converted to homes for sale or for rent. And the nation’s biggest shopping centre landlords are looking at reducing retail space and turning it into residential units.

As retail values and rents have dropped, and residential values and rents outside the prime sector continue to hold firm due to the imbalance between supply and demand, the economics of buying retail or taking existing assets and converting them to residential are beginning to make sense.

Last week the mayor of London approved a scheme that will see the 95K SF Pentavia Retail Park in Mill Hill, north east London, demolished and 844 new homes for sale built. Of the new homes, 41% will be affordable.

Existing tenants on the park include Argos, Homebase and TGI Friday. The scheme was originally rejected by Barnet Council but the scheme was called in by Mayor Sadiq Khan and granted permission. It is being developed by a division of U.S. opportunity fund Meadow Partners.

Elsewhere in London, in May L&G bought sites occupied by Homebase and B&Q big-box retail stores, which it will knock down and build a £500M build-to-rent scheme comprising 1,000 homes.

And in Bath, L&G has bought a Homebase store which will be demolished and the 4.5-acre site turned into a senior living scheme with about 270 units, as part of its Guild Living retirement living business. Some of the units will be for sale, some for rent.

So far, conversion of existing retail space to resi has been more concentrated in the retail park sector. But shopping centres, both in town and out of town, are not far behind.

Intu has said it will turn car parking space and excess land at its Lakeside shopping centre in Thurrock, Essex, into 1,000 build-to-rent homes. Westfield is building about the same number of BTR units at Westfield Stratford, although that space was always likely to be residential or offices rather than retail. Landsec and Hammerson have both said they are examining the opportunities to turn their shopping centres into more mixed-use schemes that include residential.

Further down the value chain, NewRiver Retail has teamed up with PIMCO to look for retail assets with the potential to be converted to residential.