John Lewis Partnership has scrapped its in-house housing venture and abandoned plans to deliver around 1,000 build-to-rent homes across three sites, citing a major change in economic conditions behind the decision.
The employee-owned retailer confirmed it is withdrawing from the build-to-rent market after concluding that the financial case no longer stacks up in today’s higher interest rate environment. The move ends a diversification strategy first set out in 2020, aimed at generating long-term income by developing surplus land and airspace above existing stores.
John Lewis had secured planning permission for residential schemes above Waitrose supermarkets in Bromley and West Ealing, as well as a separate development on a former industrial site in Reading.
In West Ealing, the proposals comprised 428 flats across four high-rise blocks above the Waitrose store. Bromley would have delivered 353 rental homes in a 24-storey building above the supermarket, while the Reading plan involved 170 flats as part of a £70m scheme.
The partnership said it will now enter final discussions with local authorities before deciding the future of the sites, with options expected to include selling them on to property developers.
John Lewis pointed to a combination of rising borrowing costs, higher build costs and weaker investor appetite as key factors in its decision, noting that the venture was designed for a market environment that no longer exists. Investment manager abrdn had been working with the retailer on the programme.
A spokesperson said the rental ambition was based on more stable investment returns, lower borrowing costs and more affordable construction costs, but that inflationary pressures and a more cautious property market have meant the model no longer meets the partnership’s investment criteria.
Alongside the shift away from build-to-rent, the retailer also confirmed it is exiting property management. That business will be wound down once existing contracts covering four residential buildings come to an end.
The move represents a clear reset of John Lewis Partnership’s property strategy, with the business choosing to refocus on its core retail operations and strengthen its balance sheet amid ongoing uncertainty in the housing development and investment market.
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