LIVING ABOVE THE SHOP: THE APPEAL OF MIXED USE PROPERTY INVESTMENTS

Not so long ago, ‘living above the shop’ was a common situation for many business owners, writes Harry Downing.  Of course, the phrase does tend to bring to mind a picture of Arkwright living in a flat above his ‘open all hours’ store, but in fact the concept was not – and still isn’t - restricted to small retail premises.

You might be surprised to learn that the model not dead and buried, with an increasing number of property investors understanding the benefits of combining residential and commercial premises on the same – or adjoining – sites.

For owner-occupiers, the advantages are wide-ranging.  Being able to access your business easily and quickly is not just about convenience; security is an important consideration, and of course, for many businesses, there is a need for ongoing attention 24/7.  Both of these reasons form a large part of the reason why the ‘living above the shop’ model is still ubiquitous in the farming industry.

As more and more entrepreneurs run their businesses from their homes, combining commercial premises – whether small office units or larger-scale storage and distribution buildings – makes good sense.

For freeholders, mixed use investments are nothing new.  Many of our retail streets, whether in city or town centres or suburban shopping hubs, are lined with buildings which consist of a retail unit on the ground floor and one or more flats on the upper floors.  The attraction here is that the investment risk is spread: if one sector (such as retail) is having a hard time, there is the income from the other sector (residential lettings in this case) to mitigate the damage.

Although it doesn’t happen every day, we are starting to see freehold opportunities which combine commercial and residential properties. 

We have just brought one such to the market, a short distance north of Norwich.  It combines a spectacular five-bedroom house, complete with swimming pool, gym and cinema room on a very large plot, with separate industrial units totalling 29,940 sq ft, which are currently let and providing a rental income of £186,000 a year.

The sea change in the way that we both work and use our leisure time means that the traditional separation of workspace and home is becoming ever-more blurred.  This is resulting in more flexible and diverse investments becoming more attractive.  It isn’t Arkwright living over the shop; instead, it’s a thoroughly modern way of diversifying and investment portfolio to reflect the modern world.