Feargus O'Sullivan is a contributing writer to CityLab, covering Europe. His writing focuses on housing, gentrification and social change, infrastructure, urban policy, and national cultures. He has previously contributed to The Guardian, The Times, The Financial Times, and Next City, among other publications.
For one, fewer residents are doing their shopping by car.
Anyone who thinks housing-starved inner London doesn’t have any space left to build on probably hasn’t been grocery shopping in the area recently. While inner London’s supermarkets aren’t as sprawling and vast as their suburban counterparts, they still take up large areas of prime land, including parking lots and buildings that are often single-floor. In an urban area where the number of drivers has been falling for some time, leaving parking spaces to gobble up valuable real estate like this is a real waste. And in fact, these spaces are in the midst of a big change.
Inner London is poised on the edge of a grocery store parking lot building boom, one that will see homes replace cars. Right now inner London has 15 major grocery store sites that have either just been sold, are coming to market or have residential planning permission agreed. Parceled together, that land could accommodate up to 7,500 housing units and have a market value of up to £3 billion ($4.33 billion). It’s not that the stores themselves are closing (at least not in London). They’re just shedding parking space that once seemed essential but increasingly looks like an overhang from another era.
Many commentators have been advocating this for some time. Indeed, a few London supermarkets have already built housing on the roofs of their existing stores. Now, however, the solution has moved on from being a speculative bright idea penciled in for the future to becoming an actual shift, with change-of-use permission attached, one that will soon help to re-shape inner London.
British stores aren’t doing this out of pure kindness, of course, but for two key reasons. Firstly, the value of the London land they own has shot up so much that selling the non-retail parts of it has become extremely tempting. Secondly, these companies have seen their profits plummet nationwide, and need to find some way to plug the gap.
Right now, British supermarkets are doing badly due to a mix of cross-sector business mistakes and changing consumer habits. As this article details, the U.K.’s major chains have over-expanded and have also suffered major write-downs of their property assets.
Other threats to their dominance are lifestyle related. The market has polarized, with a boom on either side of the shopping mainstream in both discount stores and farmers’ markets. Customers increasingly shop online, and many city-dwellers now prefer buying fewer items more frequently, meaning that the big once-a-week shop by car is gradually becoming a thing of the past.
For big stores built expressly around this weekly ritual, this is a rude shock that challenges their business model. It has also left them with huge amounts of land that they no longer need for retail space. The volume of un-built land that these chains now possess (albeit mostly of outside London) is staggering. As of last spring, the major chains owned around 43.8 million square feet of land where no development was taking place.
Meanwhile, on already developed sites, the decline of the weekly shop means that a large parking lot is no longer an essential asset for a successful store. In London at least, increasingly customers are walking out of stores bag in hand rather than driving. As the drivers leave, permanent residents will move in, fleshing out a city that, while still far short of meeting its future housing needs, is getting higher and denser by the month. And as supermarkets free up their urban parking lots, they’re ultimately liable to receive yet another boost: a new concentration of potential customers right on their doorstep.