Day after day, month after month, year after year, we have buyers contacting us, nay begging us, for a shell space. And we’re often asked by developers about creating shell spaces, so you’d think a happy ending was a sure thing here, yet when it comes to the crunch, developers generally end up doing the perceived “safe” thing, leaving an entire portion of the market unsatisfied. A portion we might add, of financially sorted, creative, committed, no-nonsense buyers, very often not dependent on bank finance. Given the state of the mortgage market right now, it seems an odd bunch of people to disregard.
The market is most definitely there. And it’s a market that often takes purchasers away from where they’d originally been searching, into parts of London previously off their radar. The opportunity of creating their own, unique and perfectly tailored home is such a big draw that, with the possible – some might say justifiable – exception of Penge, they’ll go almost anywhere to get it. Raw space has irresistible quality – the property market’s crack cocaine.
Take The Jam Factory in Bermondsey. 200 apartments converted from three Victorian industrial buldings, where around 50% were sold as shells. When it came to market, it was in the least salubrious part of Bermondsey – on the day of launch there were burnt out cars lining the road, that not only served as urban street art, but also helped keep the local drug dealers dry on a rainy London night. Did it stop people buying? Did it buffalo! And now the development has changed the face of the immediate area, spawned groovy local businesses and turned it into a property destination. There are plenty more examples like this all over London.
For a developer, selling shells means less financial outlay and more free time. It completely removes the expense and time-consuming selection process over kitchen manufacturers, appliance suppliers, tile shops, light switches, paint finishes and endless other specification discussions. Four walls, windows, a front door and capped off services. That’s it. Incomes a buyer and it’s yes please thank you and the entire process shifts to them. And they pay proportionately more for it too, because they know then when they’ve created their all-singing, all dancing, super-duper one-off urban pad, it will also be worth more than regular local fodder.
So why do developers constantly shy away? By their very nature they are risk takers; to be even involved in development in times like these requires a certain degree of nerve. So well done to them for even showing up. But why then restrict themselves to doing what everyone else does, and has done? It increases their competition, blurs any particularly distinguishing qualities of their own development, and simply has them be one of the crowd. And since when have property developers been so shy and retiring and desperate for no publicity? It makes no sense. At least, not to us.
THE PLAZA – TRAFALGAR ROAD – SE10. 3,000sq ft ‘SHELL SPACE’ with planning permission to create a massive Two Bedroom Loft apartment – £450,000 !!
So maybe we’re not delivering the message powerfully enough. Or maybe they just don’t want to hear. Or maybe the banks are tying their hands. Show me a creative banker and I’ll show you a liar. But it wouldn’t make sense for the banks to be so restrictive either. They’re only there to making money. They have no other function. No-one is paid to work for them to do anything else. So surely having to spend less for a greater return would also make good financial sense to them. They’ve been doing it for ages; closing branches, call centres in far-flung corners of the world, increasing charges, reducing interest on savings, increasing it on loans. None of these could be said to add to the customer service experience, but they do all increase revenue. Hmm; maybe that’s the problem. Even though shells would make them more money, they would inadvertently have a positive impact on some customers! By jove, I think we’ve got it.