Q&A: 'Sheds-to-Beds', solving the capital's space shortage

Q&A with Peter Higgins, Divisional Partner at Glenny, about the 'Sheds-to-Beds' trend, what's driving it and some of the challenges involved. What's driving the 'Sheds-to-Beds' trend Is it simply scarcity of space, or are there other factors involved? Lack of developable employment land especially in London Zones 2 and 3 is a major factor. Much of this land is has disappeared to and continues to disappear to - residential use, which is often perceived to be a bigger priority given the national housing shortage. As London and other major cities become denser, however, we're having to find new ways of accommodating the higher land demands from multiple sectors; residential, industrial and commercial. The other important thing also driving this trend is consumer demand; as the ecommerce industry grows, consumers expect shorter and shorter delivery times so brands such as Amazon and ASOS are having to position their ?last mile? logistics centres ever-closer to their markets. How does a developer ensure that both elements the resi and the logistics space are fully served and kept at a decent distance apart? This 'Sheds-to-Beds' model is in its infancy and, with very few examples, its success remains to be seen. Self-storage is deemed a compatible accompaniment to residential stock. Finding the right occupier will be very important. Developers must also have stringent leasing plans in place if one occupier leaves, what and who will replace it? The leasing strategy for these kinds of developments needs to be tight. Letting the space to a pure industrial occupiers would not be compatible with residential tenants above. What are the most complex challenges in terms of designing and building this model? Hours of use will be important to consider self-storage seems an obvious occupier choice because its hours mirror a commercial environment. But occupiers that need 24/7 access and require vehicles to move in and out of the space may not be compatible. Creating a buffer zone with commercial space on ground and lower levels, residential space above and warehouse or industrial space below could work, however this would need to be carefully designed. Natural light would still need to be able to filter into the basement space while access into the units would need careful consideration; pillars to support the building above would have to be unobtrusive to the logistical needs of the occupier. What are some of the most interesting examples of resi and warehouse space being collocated? SEGRO and Barratt have formed a joint venture to bring forward a comprehensive mixed-use scheme at the former Nestle factory in Hayes, Hillingdon. If this goes ahead, the residential units would sit alongside the industrial stock, not above it a similar but not totally exact representation of the 'Sheds-to-Beds' model. Travis Perkins undertook a development in Kings Cross, where there was an existing outlet. This was redeveloped to provide a new trade counter on the ground floor with multi storey student accommodation above; this was completed in 2012. Is there enough demand from residential occupiers for this type of resi space? If the above issues are addressed, I believe there is enough demand from tenants for residential space of this kind especially in large cities such as London where the residential needs are so high. This model seems particularly suited to student accommodation where students spend much of their time offsite and are not looking for a long-term tenure. [Peter's comments on the 'Beds-to-Sheds' trend also appear in the 26th May issue of Property Week and on Propertyweek.com] Image: The former Nestlé factory where SEGRO and Barratt Homes plan to build homes and industrial units - Source: Flickr/Mike T/Creative Commons