John Lewis agrees £500m deal with Abrdn to build 1,000 rental homes
The John Lewis Partnership has struck a £500m deal with the investment firm Abrdn to build 1,000 residential rental homes, redeveloping three sites already owned by its Waitrose and eponymous retail store chains.
The group intends to redevelop Waitrose shops in Bromley and West Ealing, and a vacant John Lewis warehouse in Reading, as the first part of a plan to build a total of 10,000 new homes over the next decade.
The locations for the new homes, which will be furnished with products from John Lewis, have been chosen because of their close proximity to transport links and central location.
The John Lewis Partnership, which reported a first-half loss of £99m and warned that a tough run-up to Christmas could put its annual staff bonus at risk this year, said the move into the rental market would provide “a stable income for the partnership”.
Nina Bhatia, the executive director for strategy and commercial development at John Lewis, said: “Our partnership with Abrdn is a major milestone in our ambition to create much-needed quality residential housing in our communities. Our residents can expect homes furnished by John Lewis with first-rate service and facilities. The move underlines our commitment to build on the strength of our brands to diversify beyond retail into areas where trust really matters.”
The John Lewis Partnership said that £500m represented the planned development value of the properties but would not give a breakdown of the level of investment being committed by each partner.
The sites will comprise one- to three-bedroom apartments.
The first planning applications for the joint-venture are expected to be submitted next year, when a public consultation process on the site in Reading is expected to begin.
If planning permission is granted after the first submission for consent, building work at West Ealing and Bromley will start in 2024, with residents able to move in from 2027.
There is no timeline in place for Reading because first proposals for the development of the site are not due to be completed until next year.
“We are continuing to assess other sites which may allow us to bring forward homes sooner,” a spokesperson for John Lewis said.
John Lewis said the build-to-rent residential property market in the UK is forecast to double in size, with 30,000 new homes completed annually by 2026, according to research by the property firm Savills.
There is estimated to be a shortfall of 75,000 rental properties in London alone.
The announcement of the first developments, which are subject to planning permission, come as renters face huge increases in costs, with private landlords rapidly raising rents amid the cost of living crisis.
The John Lewis Partnership said the long-term joint-venture would also include commitments to affordable housing and sustainability goals tied to its pledge to become a net zero business by 2035.
Neil Slater, the head of real assets at Abrdn, said: “The critical lack of quality rental accommodation in the UK needs to be addressed, so we are delighted to partner with the John Lewis Partnership to provide the required institutional investment.”
The number of homes on each site is still being determined. However, the West Ealing site houses one of Waitrose’s larger-scale supermarkets, with a sales area of 32,000 sq ft, while Bromley has a supermarket of 25,000 sq ft, compared with the average shop size of 21,000 sq ft.