How major retailers are cashing in on the revenue on their roofs | BRAC Developments

NEWS

How major retailers are cashing in on the revenue on their roofs

20.02.2020

With restrictions on building on greenfield sites in the UK, developers and planners are coming up with all kinds of interesting ways to deal with the nation’s housing shortage. 

One such idea is to start building homes on supermarket roofs. 

Already major retailers such as Tesco, Sainsbury’s, and Morrisons are generating revenue from building new homes on their roofs and land, and the trend looks set to continue. 

But why is this happening?

For years, city planners and developers have struggled to find land to build new housing to accommodate the country’s growing population, especially in the south east. During the deindustrialisation era of the 1980s and 1990s, many urban sites became available for redevelopment. But those opportunities were quickly snapped up and transformed into residential complexes. Today, few remain. 

Planners, therefore, are now eyeing up supermarkets and wondering whether they could use them as sites for additional homes. Back of the envelope calculations suggest that there might be space for 150,000 new residential units on supermarkets in London alone – a contribution that would make a significant dent in the capital’s housing needs.

Tesco Leads The Way

So far, Britain’s biggest supermarket, Tesco, is leading the way. The company has already completed residential projects in Streatham and Woolwich and has plans for another twenty sites which it hopes will yield a further 9,000 homes elsewhere. 

Sainsbury’s is getting in on the action too. The supermarket operator is teaming up with home builders Barratt at Nine Elms to construct housing on company sites in Fulham and Vauxhall. 

This trend is nothing new. Back in 2013, Tesco was already building more than 800 homes on company land. By that stage, more than 4,500 had already been planned, with both Asda and Morrisons laying out their plans for local planners to approve. Today, the numbers are much higher, but the overall vision is very much the same.

Cashing In

For the big operators, offering sites for housing is a major money-spinner – something that is most welcome in such a low-margin industry. 

Company accounts reveal that Sainsbury’s managed to secure £95 million in profit from its Vauxhall site alone. Tesco is set to generate more than £400 million from “air rights,” plus a possible further £1 billion from the sale of under-utilised spaces, such as car parks.

Locals Are Concerned About Quality

As you might imagine, there are some concerns. Campaigners, for instance, worry about the architectural quality of the homes under construction. Residents and planners fear that supermarkets will take a similar approach to their housing developments as they do their groceries – piling them high and selling them cheap. 

With that said, the plans submitted so far don’t appear to go in this direction. A combination of quality landscaping and thoughtful layouts means that the housing standards are unlikely to dip. Plus, Tesco and the others won’t want cheap accommodation blighting their stores. BRAC Developments are experts in this field and offer development of roof space in this booming market.