It is not just the big cities that will see new homes built in the centre. Yes it is most visible and prominent in places like Manchester and London, but as the data shows, smaller towns will also be delivering lots more housing in the very heart of their communities. This includes those with struggling town centres up and down the country.
Developers have so far favoured large strategic sites in the major cities, but government funding initiatives are starting to increase the viability in smaller places and we are seeing an increase in appetite from niche developers seeking to tackle the challenges in smaller and regional locations.
There is huge volatility in wholesale gas markets influencing all energy prices as well as increasing demand for green electricity. Both factors push towards financial benefits for self-reliance and production.
WHERE’S THE OPPORTUNITY?
Many retail landlords already have connection agreements in place for power supply. The infrastructure is already there, serving their existing sites. And often, the power loads have historically been overestimated at design stage compared to actual in-use consumption. Infact their agreements for power supplies probably outweigh their current requirements.
By enquiring with your power provider, you can see if your supply could be increased for minimal cost. Where there’s capacity, there’s an open opportunity to seize.
Power connections could be used to charge batteries, buying and selling from the grid at high and low periods, and generating revenue through tariffs offered by National Grid and the Government to help smooth our ever-bumpier grid. The power could be used to run electrical vehicle (EV) charging points; offering both a revenue stream and a reason to drive footfall and dwell time. These same points could be leased out to overnight EV fleet charging, making use of parking spaces when there are no shoppers present. All those EV delivery vans need to charge somewhere and often it’s not at HQ.
If we then start to consider fibre and data connections, this opens up another potential revenue stream in edge data centres: small localised high-power facilities. These are popping up across the country and with the anticipated arrival of autonomous vehicles edge data centre capacity will be key to them operating effectively.
With our lives becoming more and more reliant on power and data, if you have access to both, and the space to house an alternative use, there’s high potential to develop alternative and additional revenue streams to the traditional retail offer.
RETAIL APPLICATIONS
Working directly for an owner of 17 retail parks across the UK (6.6million sqft site area and 1.9million sqft GIA) we’ve recently assessed site-suitability to incorporate ‘smart energy’ technologies across their portfolio and maximise these sites’ return on investment.
The engineering suitability for a range of use classes were assessed, including: on-site energy generation (solar photovoltaic (PV)), battery storage, EV charging (private, public and fleet), last mile logistics, e-mobility hub, edge data centre, and even dark kitchens or vertical farms.
Across the portfolio, two thirds of schemes were identified to have a ‘high opportunity’, with infrastructure and layout favourable for logistical and mobility use classes, as well as sufficient power capacity at the local electrical substation and building roof space for solar PV.
The potential of these sites to generate additional revenue was compelling and found:
- Potential returns on investment of 70% in 4 years by installing as few as 22 EV charge points and up to 877% over 14 years with 150 EV charge points, based on daily public use.
- From renewable energy generation exported to the grid, a 112% potential return over 15 years, as well as avoiding the equivalent of 3,068 tonnes of CO2.
- Indicative rate of return of 13-15% over 25 years for a battery storage installation.
ALTERNATIVE USES FOR RETAIL SPACE
Much of our work to date has focussed on the retail warehousing sector. However, the same principle is applicable to major high streets and shopping centres. Underutilised back-of-house areas, where sufficient power and fibre are accessible, present prime opportunities. These installs also produce huge amounts of heat that can then be utilised as ‘low carbon heat’. Heat-transfer systems are being employed by adjacent property uses to mitigate one need with another with cost and carbon savings for both parties. In one example, a major UK retail landlord installed such a system to address the need to cool its hotel rooms with the need to heat the health club swimming pool.
Technology is usually front and centre to the solutions – as it advances rapidly, the cost of access is reducing in tandem. Furthermore, the amount of space required to deliver some of these applications can be very flexible and is therefore suitable to a large number of retail environments or shop units.
Fundamentally, there’s a great deal of unrealised opportunity in retail portfolios due to the needs imposed by climate change, the acceleration of consumer trends, a global pandemic, and geopolitical tensions. Most pressing is the need to move away from fossil fuels, the growing role of electric vehicles, bringing more ‘variable’ renewables on-line with greater storage capacity to smooth the grid, and a greater need for energy self-sufficiency. Spiralling energy prices further support any opportunity to generate, supply, or store energy.
For those whose space has been impacted by occupational headwinds, alternative energy solutions can help unlock the path to net zero and provide alternative and additional revenue streams. Decarbonisation can be commercialised: empowering retail landlords to do the right thing by the planet and the bottom line.
