09 Dec Morrisons joins supermarket housing game with Camden plan
Supermarket follows lead of Sainsbury’s and Tesco by unlocking cash through deal with Barratt Homes
Morrisons is joining rival supermarkets in the housing business with plans to build 700 homes as part of the redevelopment of its Camden store in north London.
The supermarket has teamed up with Barratt Homes – which helped Sainsbury’s redevelop its Nine Elms store near Vauxhall, south-west London, with more than 700 homes – to put together its plans for Camden.
As supermarkets have been forced to cut prices to take on the fast-growing discounter chains Aldi and Lidl, they have been seeking new ways to get more out of their assets.
As less space is needed in many stores, a large number of which are in prime locations, supermarkets have realised that there is money to be made by renting out space to other retailers or businesses or by developing housing.
Sainsbury’s made £95m in property profits from the redevelopment of Nine Elms alone and has said it has up to 10 other sites in London where it could potentially build more housing. It has already built flats above and around a number of stores including in Fulham.
Tesco, which has built hundreds of homes around new stores in recent years, last month said it planned to unlock cash by selling the “air rights” above stores in prime locations. An initial 28 stores have been identified for projects that could lead to developers building flats over stores and excess car parking space turned into new residential or business premises.
The supermarket is in talks with developer Apex Airspace, which is also negotiating with a number of other retailers about putting flatpack homes on top of stores in London.
Morrisons held a meeting for Camden residents last week where it presented early plans for a development which would include flats and houses, public squares, other shops and offices on the site off Chalk Farm Road.
The scheme would involve digging out part of a man-made hill created during the building of local railways so the Morrisons store will face on to a main road rather than sit above it.
Housing, including affordable homes, and public squares would be built above and around the store with a car park underneath.
Morrisons said the plans were at an early stage and it would be consulting further next year before seeking planning permission. It said Barratt was assisting with the planning application and it would be seeking a partner developer only if it got the go ahead.
The Bradford-based grocer said it had no plans to develop housing elsewhere at present and property sources said the chain might be limited because its London stores, where building flats is most cost-effective, are mostly leasehold.
Securing income from such schemes is unlikely to see a swift return for Morrisons in any case. Sainsbury’s Nine Elms scheme was in development for a decade.
Tom Edson, the head of out of town retail at property group Colliers International, said: “There are no quick wins and whatever a business does needs to balance the needs of the local authority for residential with continuity of trading.”