Raising the roof: how to scale airspace development

Southwark Council estimates it can provide 1,000 social rented homes by building on top of its council estates. This is a surprisingly large figure for such a new industry. But with schemes typically comprising less than 20 homes, it will take at least 50 sites to hit that target. Southwark’s challenges exemplify the wider difficulty of scaling this new asset class. The council launched the rooftop programme at the end of 2019, adding further sites in 2020, but it is consciously taking small, cautious steps. “That goes back to the fact that we need to get residents on board,” says Stephanie Cryan, cabinet member for council homes at Southwark Council. “I do worry that if we went to residents turning a mid-size or a low-rise block into a tower, I don’t think we would get the buy-in. At this moment in time in Southwark, one or two storeys is where we need to be – this is new for us and we really need to make sure we get it right.” Cryan is also acutely aware of the 15,000-long housing list urging expansion of this type of development. “You’ve got families who are living in severely overcrowded conditions, who need to move, people that may want to downsize, people who may need to move because of medical needs,” she adds. “It helps free that up and allows people to move there and stay within the local community.” Phillippa Prongué, chief operating officer at Apex Airspace, says this development is often led by councils or housing associations seeking to upgrade their buildings. “They bring forward the buildings in the most dire need, they need a new roof, there’s a lack of maintenance,” she says. Airspace development can pay for improvements to building fire safety, she adds, be this cladding remediation, putting in fire doors, work on lobbies or lift systems. ‘Feature, not a bug’ Resident engagement is key, more so than in traditional development, given that people often live in the building while construction takes place. Modern methods of construction can reduce disruption, but this requires a greater level of development to ensure viability. “One of the struggles airspace is having at the moment is the volume that is needed to put through the modular factory to bring the cost of it down and make it an affordable option,” Prongué says. Arthur Kay, chief executive at Skyroom, says bigger can be better, and it is possible to get residents on board with ambitious schemes. In December, Skyroom secured consent for a four-storey extension atop a three-storey building at the Chevron Apartments scheme (pictured) in Bermondsey, SE1. Skyroom has developed a “podium system” which Kay says circumvents a building’s structure, services and access, allowing extensions of up to 10 storeys. “In software terms, it is a feature, not a bug,” says Kay. “We are trying to approach this boldly. This is a new typology for the city rather than an apologetic mansard or setback penthouse.” This creates economies of scale to deliver affordable housing, so could be especially relevant to housing associations and local authorities such as Southwark. Skyroom has also raised £100m from investors in its Key Worker Fund offering development finance to these groups in the early stages of development. Applications to the fund closed in April and the finance will be awarded in the second half of this year. “Covid has really strained local authority bank balances and the ability to access financing. This is stepping in and saying there is another route in terms of funding,” says Kay. “We see this as a rallying cry, to say it doesn’t always have to be the public sector, it can be the private sector to also come in and support and work with local authorities and housing associations.” Dangers of deregulation The private sector is also jumping on rooftop development, providing vertical mixed-use schemes. Earlier, this year Hampshire-based National Regional Property Group received consent to convert a 192,000 sq ft Debenhams into 24,750 sq ft of ground-floor commercial space with 132 flats above. Last year, housing secretary Robert Jenrick approved new permitted development rights to allow two-storey extensions to blocks of flats, paving the way for new entrants with an automatic approval. “Our view of PDR is not hugely positive,” says Kay. He points to examples of substandard development in office-to-resi conversions and says complex airspace development is better suited to a full planning application. The risk is a rise in smaller players with short-term thinking tarnishing the industry, he adds. In a bid to try to prevent this, Apex Airspace has launched the Association of Rooftop and Airspace Development. “For local authorities and people to trust you to develop, they want you to prove a track record,” says Prongué. “We needed some form of body to help govern and monitor this and start lobbying and really protecting the whole sector.” But it also needs an alignment in local government. Prongué would like to see greater collaboration between councils and the Greater London Authority “to help overcome the initial working capital and to join up the documentation”. Cryan says there is unquestionably appetite from councils to allow airspace development. “We are in a housing crisis. Southwark is just one example – you can multiply that by all the other local authorities in London,” she says. “If we are going to provide the level of social and council housing that is needed, you cannot do it by just building from the ground upwards.”   To send feedback, e-mail emma.rosser@eg.co.uk or tweet @EmmaARosser or @EGPropertyNews