It was announced last month that new ‘garden’ towns and villages are going to be built across England in an attempt to alleviate the housing crisis. The scale of these varies with 14 new villages between 1,500 and 10,000 homes and a further three towns of more than 10,000 houses each to be built alongside existing towns. This doesn’t include Bicester which was announced to be Britain’s first garden town in 2016, let alone the new garden city being constructed at Ebbfleet.
Great news on the housing front, but what are the people living there going to do in their spare time? And most importantly, from FSP’s point of view, where are they going to shop? All planned locations are close to relatively strong retail locations so they are unlikely to be able to sustain a large scale comparison goods retail offer. However, in order to make them attractive locations to potential residents (and therefore achieve a higher return on investment through increased house prices), there is a requirement for a certain amount of retail, leisure and services. The challenge for both developers and potential tenants is that a degree of critical mass is required in order for these to succeed. Depending on the scale of the development, they may also need to have sufficient pull to attract users from outside the development to help sustain their business in the long term.
The approach and techniques adopted by occupiers and investors to evaluate commercial opportunities are radically different to those utilised in traditional town planning. As a result, a successful planning application does not always guarantee a commercially viable development.
It’s vital that both the amount of space and the type of uses are appropriate. Too much space and it will either underperform or remain vacant due to insufficient demand. Too little and residents will be forced to go elsewhere. While it will always be theoretically possible to develop additional commercial space, finding a suitable, accessible location in the midst of a residential development can be problematic, to put it mildly.
As former retailers, FSP uses the same location assessment techniques used by commercial occupiers. FSP has provided strategic advice on a number of residential lead developments, focussing on the retail and leisure space. Our aim has been to ensure that the optimum amount of space is provided and that the scale and configuration of individual units suits the needs of occupiers, in order to ensure that this aspect of the development is commercially viable.
For each development we have worked on, we have followed a similar process:
- Create a bespoke catchment for each element of commercial space (convenience retail, comparison goods, leisure etc.)
- Take into account where those people currently living in the area shop and the scale, format and quality of existing provision.
- Project the demographic make-up of new residents based on the format of housing so that we understand their specific needs
- Assess the quantum of sustainable commercial space based on residents’ available spend and the share of that spend that is realistically attainable to commercial operators, combined with our knowledge of retailer performance across the UK and Europe to estimate realistic sales densities
- Make specific recommendations as to the type of occupiers that would be appropriate
There are of course challenges in attracting occupiers to any development, least of all one which is dependent on new residents living in houses that have not yet been built. However, by building a compelling, evidence-based case using FSP’s solid track record on this type of project, developers can maximise their chances of a building successful commercial space.