John Lewis will become the first British retailer to build rental housing after allocating two Waitrose supermarkets and a former collection depot for redevelopment.
The employee-owned association is moving forward with plans to build 10,000 rental homes over the next decade, despite the projected collapse of the UK economy as it seeks to diversify its income away from retail.
John Lewis said the houses would be built for homes of different sizes and would be offered with a variety of long and short term tenancies. He pledged to involve local communities in a design and planning process that was expected to begin later this year.
An investment partner will be added to help fund the redevelopment, he added.
John Lewis intends to manage rents on his own as he “seeks to raise standards in rental ownership” and will also offer furniture packages to potential tenants.
A supermarket in West Ealing will be rebuilt to include overnight accommodation, in a process that can take about 18 months and involves the construction of a temporary store on the site.
A Bromley supermarket will also include rental units. Reading’s third place used to be a customer collection point and is now obsolete.
John Lewis said the sites were chosen in part because of their proximity to local transportation links and high rental potential. According to Foxtons real estate agents, the average rent for a two-bedroom apartment in West Ealing is more than £ 1,700 a month.
The expansion of the nascent “build for rent” sector in the UK has so far been largely limited to insurers, specialist real estate companies and entities such as Transport for London.
It is much more common in some other northern European countries, such as Germany, where only Vonovia, the market leader, has more flats than the entire construction sector for rent in the UK.
Dame Sharon White, president of John Lewis, has argued that the association must diversify its sources of revenue to ensure the group’s survival as the profit margins of its main retail business are under pressure.
It has been set that two-fifths of the revenue will come from non-retail sources by 2030, with the expansion of financial services, furniture rental and horticulture also planned or already underway.
Although John Lewis has a well-developed online offering and a loyal following among middle-class Britons, he still closed 16 department stores and laid off thousands of partners during the Covid-19 pandemic as he sought to cut costs and reduce your debt.
Membership bonuses were reduced to zero in 2021 for the first time since the 1950s, although a small payment was restored this year.
Nina Bhatia, the former McKinsey consultant introduced by White as director of strategy and business development, said the idea was to leverage the reputation of the quality and service partnership.
“Helping to create housing has always been at the heart of what we do and now we have a unique opportunity to use our experience and skills in new ways to deliver much needed new housing.”