Five Considerations For Landlords When Repurposing Premises
With the Covid-19 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 stock.
In theory, this seems to present an easy route to re-let and get rent flowing back in, but is it that simple?
Five Considerations For Landlords Looking To Repurpose Their Premises
1. Is it allowed?
Turning that tired and vacant department store into luxury student flats would appear to fit the bill but is the property subject to covenants restricting its use or requiring third party consent for changes to use or the building? This is particularly pertinent for leasehold properties and Landlords should ensure this is considered by their legal advisers at an early stage.
2. Reaction
A cherished department store making way for discounters and charity shops may not immediately find favour amongst shoppers and other city centre stakeholders even if it could open up 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.
3. Mix it up
That huge retail or office space may not lend itself to a single-use.
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.
4. Repurpose, Repurpose, Reinvest
Repurposing may appear an obvious solution but is likely to be an expensive and time-consuming exercise. With the market for city-centre living accommodation, strong many buildings will be highly sought after and a sale with subsequent reinvestment outside of the urban landscape may present more accessible growth opportunities. The warehousing and distribution sector is particularly buoyant.
Overage or clawback provisions negotiated upon a sale for development may also open up a future income stream.
5. Don’t go it alone
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. A collective approach may also provide greater access to funding and knowledge.
