Some 6,500 new homes could be created by converting long-term redundant retail premises into housing, according to research by NVM Business, the commercial real estate arm of real estate agents’ association NVM.
The future of some types of Dutch retail real estate remains uncertain, given the impact of coronavirus on people’s shopping habits and the surge in online sales. According to national statistics office CBS, the online retail sector saw sales shoot up 86% in the first quarter of 2021, compared with 2020.
While supermarkets and food shops in busy neighbourhood shopping centres, for example, are doing well, the picture is less bright for inner city high streets which focus on non-food, NVM Business says.
As with offices, the high vacancy rate in some retail sectors offers opportunities for residential housing. Some 800,000 square metres of retail space have been vacant for more than a year and transforming redundant shops into homes is, says NVM Business chairman Sander Heidinga, ‘a very interesting challenge’.
NVM Business estimates that converting retail real estate could reasonably generate 6,500 homes in the coming years, but points out local zoning plans will have to be changed to make this possible.
‘However, many local authorities now realise that they need to change the retail landscape, because of the changes and impact of coronavirus,’ NVM Business says. ‘They are more aware of the need to tackle the problems.’
The finances do need to be carefully worked out because redevelopment is expensive and housing generates lower rent than housing. Daylight can also be a problem in dense retail areas, the organisation points out.
Last year, retail estate advisory group Colliers said that 10,000 apartments could be developed by converting empty shops in the 70 biggest towns and cities. And although there are problems with shape and size, 40% of empty retail properties do offer opportunities for conversion, Colliers said.
The province of Noord-Holland is also looking into the options. It estimates, for example, that up to 400 homes could be created in central Hoofddorp by converting redundant shops.
The office market is also facing a coronavirus-driven shake-out. Last year, some 420,000 square metres of redundant office space was either given a new lease of life or demolished, and 53% of it was converted into housing.