England is home to almost £1.8bn worth of mixed-use property opportunities with latest research suggesting investors and developers are increasingly revisiting a sector that offers multiple routes to value creation.
Analysis by West One Loans found there are currently 3,899 mixed-use properties listed for sale across England, with a combined market value of £1.77bn and an average asking price of £452,681.
The figures point to a growing pipeline of opportunities for developers seeking assets that combine existing commercial income with residential conversion, refurbishment or redevelopment potential.
Mixed-use assets continue to represent an attractive segment due to the flexibility they offer around exits, planning strategies and value enhancement.
AVAILABLE STOCK
London accounts for the largest share of available stock, with 663 properties listed and a combined market value of £599.1m. The South East follows with £310.5m of stock, while the North West ranks third at £156.5m.
However, the strongest growth has been seen in the North West, where mixed-use listings have increased by 23.1% over the last year. Across England as a whole, available stock has risen by 5.6%, suggesting improving activity after a subdued period.
At the lower end of the pricing spectrum, the North East remains the most affordable market, with average asking prices of £181,093 – less than half the national average.
For developers, mixed-use assets can offer several potential strategies, including residential conversion, reconfiguration of existing space, refurbishment or long-term income generation.
STRONGER YIELDS
Duncan Abraham (main picture, inset), regional director at West One Loans, says: “Mixed-use property remains an important part of the market because it can offer commercial investors and developers greater flexibility, stronger yields and multiple routes to generate value.
“In many cases, these assets provide commercial investors with the opportunity to acquire an under-utilised building with an existing commercial element, whilst also benefiting from the strong demand we continue to see for residential space.
“For developers, there is often clear scope to enhance the value of a mixed-use asset through light refurbishment, reconfiguration or redevelopment.”
RESI-LED MIXED-USE
Abraham says residential-led mixed-use schemes remain particularly attractive from a funding perspective.
“At West One, our development lending is residential-led, which means the residential aspect of a scheme must account for at least 65% of the total value.
“Where that is the case, mixed-use opportunities can be particularly attractive to commercial investors, especially because we calculate lending against the vacant possession value of the asset.
“This can allow borrowers to unlock greater leverage where there is a clear plan to improve the property and increase its value.”
EXIT STRATEGY
He adds that developers increasingly want lenders capable of supporting both the development phase and the eventual exit strategy.
“We are also seeing more developers look for a funding partner that can support the entire lifecycle of a mixed-use scheme.
“That could mean providing the initial development funding and then supporting the long-term exit via a buy-to-let mortgage where the completed scheme remains predominantly residential, or a commercial mortgage where the asset retains a stronger commercial element.
“Having one lender able to support both routes can provide greater certainty and flexibility for developers.”
