It’s been a couple of years now since Tesco pioneered the large-scale development of air rights. The supermarket chain worked with property developers to build hundreds of flats on top of its superstores and car parks – creating up to 150,000 new homes. This led to reports that B&Q and some retail park and shopping centre landlords – even the Royal Mail – are exploring the possibility of building residential flats above their properties.
Not to mention interest significant interest from Transport for London and Southwark Council here in the capital.
The value of the space above any property (residential or commercial) obviously depends on location, size and suitability for development. This includes whether the structure is strong enough for further construction and how many units it can reasonably take. The volumetric format (airspace subdivision) uses three dimensionally located points to identify position, shape and dimensions of each bounding surface.
This kind of construction is popular in central London, where values are high, and profits can be made easily. Some developers don’t buy the airspace but cover all the costs of development, from gaining planning consent to final installation of the rooftop properties.
In return, they offer the freehold owners a share of profits on the sale of the new apartments. Other firms prefer to buy the airspace outright, then undertake the construction but retain any profit from unit sales. By entering a joint venture with companies such as Landmark Modular, it’s possible to open the door to significant new revenue – without taking on all the risk.
To minimise disruption to residents and the local community, many developers use pre-made, modular structures that are built off-site and installed almost fully formed. This reduces the need for on-site labour to a few weeks, and has been heavily backed by the Government in a White Paper as a way to speed up construction.
As Fyodor Blumin, investment director of Noel and Partners (noelpartners.co.uk), recently told that The Daily Telegraph:
“Not as many building owners are exploring the opportunity as they could be, but I believe it has the potential to contribute to solving London’s housing issue.”
Noel and Partners recently completed two penthouses above an eight-floor building with a roof space of 3,500 sq ft in Victoria. Each property has a modern steel frame and glass walls with views along the Thames towards Westminster and were listed at £3.95 million.
Landmark Modular have been using modular building systems for over 18 months. So we bring significant specialist experience and expertise into the commercial airspace sector. Constructed in our dedicated Yorkshire factory, our strong and bespoke modular structures make commercial and residential airspace development simple.
As well as massive development potential for existing buildings and underutilised sites, especially in London, the benefits also include reduced overheads, options for joint ventures between developers and landowners, and the ability to creatively finance such projects. So it seems that modular airspace options could arguably be the solution that the construction industry has spent so long looking for.
For those developers, landlords and leaseholders with the vision to look upwards, airspace development will undoubtedly now be their chosen path to enhanced profits…