Traditionally, UK high streets were comprised of structures with retail on the ground level and residential above. Today, as developers look for creative and innovative solutions to the housing crisis, we are seeing a modern take on this classic model through the utilisation of air rights. The sale of the rights to build over retained land on a long leasehold basis is a concept that is becoming increasingly popular, and could see a minimum of 150,000 units delivered above retail stores in London alone.

Traditional UK high streets with retail on the ground level and residential above

Numerous retailers and asset managers are exploring the option of developing above their stores or shopping centres, although supermarkets are interestingly ahead of the trend and well underway in the process of teaming up with house builders to make the most of the air rights above the large-scale stores. Because shopping centres are often in key central locations, they provide growth areas for maximising the potential of air rights. Due to this, developers and asset managers are beginning to take into consideration how the space above centres can be utilised when planning redevelopments.

Tesco, for example, announced in November last year that it is planning to build hundreds of flats on top of its largest urban supermarkets. This saw 20 air rights sites in London identified as capable of delivering approximately 9,000 residential homes, generating an estimated £400 million for the supermarket chain. Sainsbury’s has also started to implement a similar approach, but has taken an alternative route, utilising the space both above and below. The redevelopment of a Sainsbury’s store in Fulham saw it move the store to another part of the site and put it on stilts, creating a car park underneath to accommodate the residential on top.

Fulham Riverside above a Sainsbury’s superstore

While it all seems simple in theory, there are a number of considerations that need to be made when looking into the feasibility of air rights, particularly if you are looking to minimise the impact the redevelopment may potentially have on trade. The structural integrity of the original building along with whether the lower levels will need to be reinforced can dictate the method that needs to be used for developing above existing stores or shopping centres. For example, the use of off-site construction is an option that can minimise the disruption to trade.

However, in some circumstances it can prove to be more effective to consider redeveloping using a phased approach to allow for sections of the shopping centre to remain open and in use while the structural integrity of others is reinforced to accommodate for the additional levels. Of course, planning permission and other regulations, such as rights-to-light laws, need to be addressed. In particular, the challenge of dealing with the impact on communities in built-up environments must be taken into consideration.

The sale and use of air rights is just one of many innovative solutions to the housing crisis in the capital that we are beginning to see. When land is scarce, it provides a way to accommodate residential above traditionally retail structures. Given the increasing popularity of this method, it would not be surprising to see it rolled out nationwide.