John Lewis reveals £500m deal to build 1,000 new rental homes as it diversifies from retail

The £500 million deal with investment giant Abrdn set JLP – which also owns Waitrose – on course for its plan to become a major landlord with a portfolio of 10,000 homes.

The initial plans are linked to sites owned by the company in London and Reading.

The one, two and three-bedroom flats will be fitted out with John Lewis furniture and rented out to tenants.

The business said last year that it wants to make around 40 per cent of its profit from outside retail by the end of this decade.

There is only currently one John Lewis department store operating in Yorkshire in Leeds after it confirmed the closures of its Sheffield and Leeds stores last year.

The flagship Sheffield store in the city centre had been purchased by the local council before its closure. It is being sold on a 250-year lease by the council, with a winning developer expected to be announced next year.

The building was given Grade II listed status – preventing its potential demolition - earlier this year following a campaign by Hallamshire Historic Buildings and the Twentieth Century Society against the wishes of the council. The local authority believes it is “unlikely” any new developer would wish to reopen a similarly-sized department store at the site.

The site of the York John Lewis store on the Vangarde Shopping Park was put on the market earlier this year.

Nina Bhatia, executive director for strategy and commercial development, said the new homes plan for the sites in London and Reading were part of a broader strategic change.

“Our partnership with Abrdn is a major milestone in our ambition to create much-needed quality residential housing in our communities.

“Our residents can expect homes furnished by John Lewis with first-rate service and facilities.

“The move underlines our commitment to build on the strength of our brands to diversify beyond retail into areas where trust really matters.”

The first 1,000 homes on which JLP has partnered with Abrdn will be built on the sites of two Waitrose shops in Bromley and West Ealing, both in Greater London, and replace a vacant John Lewis warehouse in Mill Lane, Reading, Berkshire.

JLP said around half of the 10,000 homes it plans to build will use sites that it already owns and needs to find new uses for.

Neil Slater, head of real assets at Abrdn, said: “The critical lack of quality rental accommodation in the UK needs to be addressed, so we are delighted to partner with the John Lewis Partnership to provide the required institutional investment.

“The ambitions and responsible ethos of our brands both strongly align, and our partnership should offer investors long-term returns and give residents confidence in a top-quality living experience.”

A John Lewis spokesperson said more details about the homes plans will be made public soon, with planning applications being submitted in 2023.

“We continue to work with the local authorities and communities to evolve our plans and expect to announce more details for West Ealing and Bromley in due course, before aiming to submit our first planning applications next year,” they said.

" A first public consultation for the site in Reading is expected in 2023.”