Homes revitalise town centres

Copyright: David Lawson/Financial Times April 2000

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At first glance it is hard to see much in common between the vibrant heart of New Orleans and a shopping mall deep in middle England. But they share a thread running around the world  through European city centres,  Manhattan office towers and English industrial conurbations. Developers are creating homes in places they would have once considered unthinkable.

 A combination of fashion and frustration with commuting is pushing people back into  town centres and developers have followed.  When real estate analyst Geoff Marsh combed through statistics on central London a few years ago, he estimated that a handful of the most prolific developers  had become  among  Europe's top builders.

 But not  one was from the primary listed companies. Superior economic returns from offices and shopping plus a history of political interference in housing is blamed for a peculiarly British dislike for residential development. That is left to builders. Just as powerful, however, is a planning system which has separated home and work, driving new housing from  city centres.

 This bemuses outsiders. Multi-family blocks are an integral part of US real estate portfolios while apartments mould seamlessly into French and Spanish shopping developments. Times are changing, however.

 Central London is awash with  apartments carved out of former office blocks. Mr Marsh's London Residential Research estimated  that around  9,000 new homes would come  on the market last year compared with  almost nothing a decade ago. The trend has spread rapidly across the  UK. Urban Splash has converted 2m sq ft of former industrial buildings to homes in Manchester and Liverpool. Others are developing in centres like Bristol, Cardiff, Leeds, Sheffield and Edinburgh.

 Leading housebuilder Barratt has  proved that the formula can also work for smaller  centres. A veteran of 15 London conversions, the firm has answered doubters by selling out developments in suburbs like Ealing and Ruislip. It is even designing a city-style scheme in the heart of Rickmansworth.

 These changes are due to a combination of economics and attitude. The recession left some commercial property almost worthless. That opened the door to pioneers like Manhattan Loft which, as the name implies, imported a New York lifestyle.

 'People have always wanted to live in city centres,' says Mr Marsh. 'Look at the expensive parts of London's West End and Manhattan or the redevelopment of warehouses in London's Docklands.  But there was no developer brave enough to do it more centrally.'

 Conversions in City fringes like Clerkenwell became fashionable among young professionals prospering in the booming financial markets. Renting, another market previously stifled by political interference, was revived by laxer controls, bringing investors swarming. Fashion evolved into  a deeper need to avoid the cost and tedium of commuting. Initial reluctance among planners bent under the pressure of demand.

 Housing is now becoming an integral part of inner city regeneration. Redevelopment around the Paddington transport interchange in west London includes more than  500 homes. Birmingham's Brindleyplace mixes housing with commercial development. More  will follow as the UK government insists that housebuilding should concentrate on 'brownfield' sites to relieve pressure on green belts.

 Can big commercial  developers make the transition?  Only Frogmore, which

hovers just below the elite, is equally comfortable  with  residential development. It is no coincidence the firm is a partner in Paddington and pioneered conversions along London's South Bank.

 But there are hints in a small town west of London about what is possible. Hammerson, one of Europe's top developers, is building 40 flats into its 200m pound Oracle retail centre. Development director Peter Cole has no doubt that town centres need  activities like housing and leisure 'to give them life.'

 Hammerson is an exception, however. Cole says the influence of buying schemes in Paris and Berlin with integral or surrounding housing provides an edge over most UK developers which have no overseas experience.

 Smaller, more entrepreneurial, firms and traditional housebuilders remain the best bet for bringing homes back to town centres. 'It's a pity because this is not rocket science,' says Tom Bloxham, who took an enthusiasm for old buildings while a student and created the multi-million-pound business Urban Splash.

 He proved that even industrial cities like Manchester, with little tradition of inner city housing, could be revived. Bloxham demolishes the argument by commercial developers that  finance is difficult. 'You should not let funding drive your business plan. It should be the other way around.'

 Ironically, some pioneers are carrying the message back abroad. David Hitchcox, who helped found Manhattan Loft, has teamed with designer Phillipe Starke to build designer apartments. He is targeting cities like Lisbon, Frankfurt, New Orleans, Melbourne and Paris. 'Many already have a tradition of inner city living, but they are also seeing more people move back in,' he says.

  If, of course, they can afford it. City centres are already expensive and these flats are not aimed at the masses. Planners fear greater pressure will drive out lower-income workers vital to firms whose executives are generating this buying spree. Many demand that 25 per cent of homes in new schemes must be 'affordable'.

 Developers often argue this can make development uneconomic but Bloxham says he can sell for as little as 50,000 pounds. Partnership with housing associations can also help . Metropolitan Home Ownership created 100 shared-ownership homes next to the historic Royal Mint after being given land the local authority.

 But much more is needed. 'There is still a great deal of land lying unused,' says Chris Walker, a director of Fairview Homes, which specialises in inner city development. Affordable homes can be created by building on sites at higher density. This is just what the government wants, but planners appear not to have caught up.