‘Five Step’ approach to repurposing council space

The estate has been identified as a major limiting factor on the ability of the NHS to reduce the current waiting list size of 6.5 million people in England alone. What can we do to provide the right space with so many financial pressures on the public finances as a whole? There are lots of opportunities to create new healthcare facilities in existing buildings, and we need to make sure that the right first steps are taken to ensure unnecessary costs are not incurred.

Repurposing existing local council buildings for healthcare provision undoubtedly has both timeframe and CO2 benefits over new build, but although there is established experience drawing on HM Treasury’s The Green Book and NHS guidance on building projects for new-build NHS capital projects, the procedure for repurposing is less clear-cut. Of course, starting any building project requires a significant amount of senior management time, with the early stages in particular often very time-consuming and expensive, when there is considerable uncertainty.

Benefits beyond reducing elective waiting lists

In this article we analyse the benefits of investing in healthcare in the community (why the benefits go beyond reducing elective waiting lists), and set out our methodology for repurposing office/retail for healthcare. All in all, we believe a compelling case exists for investing in healthcare spaces outside of hospitals. Moreover, we have a clear and structured methodology that enables council and NHS executives to repurpose existing retail/ office spaces with reduced risk and lower cost.

Clearly the estate is not the only challenge facing the NHS. With some 106,000 vacancies (as of late 2024/early 2025), and a significant proportion of temporary staff filling posts, there are other issues, but there remains an urgent need to improve the condition of NHS estates. There are many reasons for this and, as the Darzi report, Independent Investigation of the National Health Service in England, published last September, notes, ‘the NHS has been starved of capital’, citing a shortfall of £37 bn. It’s not a simple task to get best value we need to provide for uncertain future needs, while considering how spending should be prioritised on competing short and long-term objectives.

A global shift

The Darzi report also highlights an opportunity for health in the community. This global trend towards shifting more healthcare in the community — with better experience for people and more economic sustainability, is well established. It is clear that in the long term we need to transition from a healthcare approach that ‘fixes’ individuals, towards systems which support populations
to live well. The Institute of Healthcare Improvement promotes the ‘Triple Aim’ as being the ultimate destination of healthcare systems: (1) Better health for the population; (2) Better experience of care, and (3), Reduced per capita costs. Moving more care out of hospitals is one step toward achieving this. With short-term budget constraints, we need to take cost-effective steps in the right direction of this movement.

The NHS Confederation’s 2020 Health on the high street report is very much in line with a move to a different healthcare system. Turning the strategy into a deliverable plan is currently very much on a localised basis, with some great schemes moving forward. An example of this type of thinking is the Barking Riverside development on the banks of the Thames, which co-locates a waterpark, gym, café, and a range of healthcare and support workers, to help with mental, physical, and financial health. This is a £40 m joint local authority, Barking Riverside Ltd (BRL), and CCG development in the pipeline. BRL is providing land and funding to the project, and is a key partner. Barking Riverside is a residential development scheme being led by Barking Riverside Ltd as master developer. BRL is a joint venture between the housing association, L&Q, and the Mayor of London.

There is a strong and well-established case for more healthcare facilities in the community, but with all the pressures on budgets, and Net Zero regulations, new-build schemes may not always be the answer. Repurposing existing buildings within town centres not only brings healthcare into communities — which is progress from the NHS perspective, but it also has regenerative benefits to town centres; research by Legal & General shows that 48% of visitors to town centre healthcare centres go on to shop at local retailers.

NHS and local council collaboration

While government bodies have for decades acted as operational property owners and managers, on the whole they have tended not to invest in commercial properties for financial return, or speculatively to aid regeneration. However, in the mid- to late-2010s local councils started to purchase a considerable amount of commercial property for these reasons. The trend spiked, with councils spending £6.6 bn on commercial property between April 2016 and April 2019, over 14 times the amount spent in the previous three years. While some councils purchased outside their own borough purely for investment reasons, many of the commercial buildings were purchased for regeneration and economic development strategy, but remain without a detailed development plan.

A significant number of these commercial properties are now vacant, or likely to become so due to a combination of market and regulatory factors, so the need for development plans is now urgent. Changes in shopping habits, with the rise of online retail, have resulted in more vacant high street and shopping centre units. The move towards home/hybrid working has also changed what occupiers want from office space, resulting in limited demand for older-style office accommodation. Further changes in environmental standards (Energy Performance Certificate requirements and Net Zero targets) for office space will also render some buildings unoccupiable, or in need of considerable refurbishment, before they can be used. All these factors add to the current economic pressures on councils, while they still need to fulfil environmental, social value, and governance criteria, from their properties.

NAO research

Research undertaken by the National Audit Office shows that the number of vacant council-owned properties had increased by 11.2 % between 2017 and 2023, and that figure is likely to have increased further since then. For the two years proceeding December 2023, there were 4,908 council-owned non-domestic properties which were vacant for part of that period, with many remaining that way at the end. The annual cost to councils of holding vacant properties is over £44 m, and the total area of these properties is 8.3 million m2, which can be analysed to equate to over 4,000 health centres.

Some of these council-owned buildings or sites have the potential to be the ideal location for health hubs, but bringing together all the parties — including the private sector — to bring finance and expertise, needs a clear, systematic approach. The different knowledge, objectives, and financing/budgets of the parties needs to be carefully navigated. While NHS and council leaders all want the best for their local residents, the structures, funding systems, and ways of working we have inherited, do not always support collaboration.

Enabling all the relevant parties to bring priorities into alignment will be a key factor in the development of a scheme, and while in the long-term the English Devolution White Paper (published in December 2024) should help facilitate a more collaborative approach, shorter term there will be disruption for councils, which also needs navigating.

Collaboration within the public sector is nothing new, and we have worked on various initiatives to collaborate across councils and their local NHS. However, many good ideas have struggled to move forward or fallen down due to misaligned objectives and ‘chicken and egg’ scenarios. We have seen scenarios where councils have offered space for a new primary care facility, but the local NHS commissioning organisation did not see the particular locality as its top priority for capital investment.

In other scenarios, while the parties were keen to work together, and a site was identified, development of a plan was hindered, as the Integrated Care Board was unable to give an indication of the amount of accommodation required, or the approximate rent it was able to pay. Until an overview was provided, it was not possible for the councils to commit to further investment to exploring the project, or to put in place any governance arrangements to oversee preliminary work, e.g. drawing up plans etc.

Repurposing over new-build

Whilst there are challenges to NHS and local 
authority collaborations, there are substantial benefits 
to repurposing existing buildings. This 
could be a simple fit-out, or a comprehensive refurbishment, stripping the building back to its concrete frame with additions and cut-outs to provide a complete redesign. Not only does a comprehensive refurbishment present the potential for a reduced project/construction timeframe and costs, but it also has considerable environmental benefits; even timber-framed new buildings cannot come close to the CO2 credentials comparative to a refurbishment. The CO2 benefits of repurposing existing buildings have resulted in the growth of ‘retrofit first’ policies coming into effect, meaning that refurbishment must be considered before permission will be granted for the demolition and new build in some areas.

Starting any building project requires a significant amount of senior management time. The early stages in particular can be very time-consuming and expensive (for example with the associated costs of consultant advice), when there is considerable uncertainty. To decrease that uncertainty and prioritise projects there are significant benefits to having initial overviews, with high-level consideration of all the potential factors.

There is established experience drawing on The Green Book and NHS guidance on building projects for new-build NHS capital projects, but the procedure for repurposing, which may well fall below the threshold for needing an HMT-compliant business case, is less clear-cut.

We have seen instances where, even where there is a strong desire to create more healthcare facilities near places where people live and work, it can be difficult for the parties to know where to begin. Some projects begin by commissioning designs, others by commissioning investigations, and some even begin the process of a Green Book business case.

There are many interdependent factors in developing 
a healthcare facility; for example, the spatial and structural designs are dependent on the facility requirements (for example, does it need to support heavy scanning equipment?), which themselves depend on future development in the area (e.g. there may be additional housing), and the additional funding this may bring.

Harnessing the ‘right’ knowledge

All of this means that project leaders risk getting numerous specialist advisors and obtaining specialist advice on specific aspects of the project, but not an overview, and risk missing key issues. The obstacles to getting the right information at the right time can be exacerbated when project leaders themselves have in-depth knowledge of a local area and need, but don’t have in-depth knowledge of multiple comparable schemes.

To overcome this, we have worked on providing a ‘Healthcare Repurposing Viability’ report that gives NHS and council leaders, and their stakeholders, sufficient information across a range of areas which impact the project. This enables justified reasoning to support whether to proceed with a project for repurposing (say) office or retail space. It also includes a roadmap for how this should be done, with recommendations on the investigations needed, and opportunities to optimise commercial aspects of the project. Due to the complexity of these projects, and the interdependent nature of the information, taking a structured approach is key.

Our Five Step methodology provides this structure, 
with findings captured in the Healthcare Repurposing Viability reports. This approach begins with assessing 
the project’s alignment with existing health and care strategies and local NHS and council plans. It is not typical to bring together strategic and property considerations into a single report for public sector leaders, and in doing so it provides a clear overview for the potential of repurposing an existing building for healthcare purposes.

Our Five Step approach provides a low-cost, fast way for the NHS and councils to assess the outline viability of repurpose existing retail/office space.

Our methodology’s five steps are:

• Step1: Desktop research into local strategies and plans, and information about the property and local area. This includes a review of ICS, council, and NHS Trust vision and strategies, including estate strategies.
• Step 2: A site inspection, to identify opportunities and constraints and engage a wider network for property intelligence and knowledge of comparable schemes, to develop and assess options.
• Step 3: Run one or two workshops with NHS and council leaders, to ensure alignment on strategy, objectives, and potential uses and funding options.
• Step 4: Test service options given the property constrains with our Experts Network of clinical and care specialists. We are able to get clinical input from our Experts Network early in the project, to minimise disruption, and to allow for more targeted clinical engagement when the project is more developed.
• Step 5: Produce a Repurposing Viability Report. Analysis of benchmarks, providing an understanding of the viability and risks and commercial opportunities. Recommendation. Produce Board presentation summary.

Bringing together strategy and property

The benefit of a holistic Repurposing Viability assessment is that it brings together strategic, clinical, and property information to provide an initial overview. In doing so it can quickly eliminate options that otherwise would have been subject to costly detailed consultant design and investigations. There are multiple pieces to the jigsaw when formulating a detailed plan for a healthcare project. At the initial stages of a project there is notable uncertainty, and this frequently results in different individually instructed external advisors providing information that ‘compares apples with pears’. By providing a clear direction at the outset, succinct instructions can be given when initially putting together a design team. The outcome is that when the specialists are bought together, they provide advice that is aligned. and are only commissioned to provide the information needed at each stage. Overall, this results in time and cost reductions in the long run.

Traditionally, Strategy and Estates are quite separate areas within the NHS. Yet the two areas are, and should be seen as, interlinked. Strategic aims can be held back by the limitations of the estate, and availability and condition of estates can become a strategic driver. Bringing together strategic and clinical objectives with property constraints and opportunities at an early stage of a potential project allows health and care leaders to take an informed view on that potential development.

The Repurposing Viability report will reflect local ICS and council strategies, which all seek to address seek the wider determinants of health. This means that a new scheme may include traditional health and care services and non-traditional ones, which may be private. The transparency of the approach, its relatively low cost, and the associated speed, enable all parties to be bought together, and for NHS and council leaders to have sufficient information in all aspects of the repurposing to be able to make an informed decision on whether to proceed with the project, without the need for expensive detailed plans or investigations at this stage.

Unlocking the potential

While it’s not simple, councils and the private sector can help to unlock the potential of a healthcare scheme. There is no ‘quick fix’ for addressing the very significant challenges the NHS currently faces. Repurposing compared with new-build has the potential to deliver new types of facilities in relatively short timescales, be cost-effective, and more environmentally sound. Repurposing existing council-owned properties can provide benefits 
for the NHS, financially challenged councils and, most of all, local people. However hard, let’s all work together.