Most development sites are bought on a combination of instinct, precedent, and partial analysis.

In my day-to-day work, I spend a lot of time with investors testing small residential schemes before acquisition — working through what a site can realistically support, and where the risks actually sit. What becomes clear quite quickly is that the gap between what looks obvious and what is actually viable is often wider than expected.

This newsletter exists to make that gap visible.

Starting with this one.

There is a particular type of small London site that generates disproportionate excitement among first-time developers. It sits on a familiar high street, it has a derelict shopfront, and the buildings either side tell a story of what is already possible. Four storeys here, three storeys there. The gap in between feels like an invitation. The assumption forms quickly: this is a straightforward infill with planning logic already written into the streetscape.

That instinct is not wrong. But it is incomplete — and the gap between instinct and analysis is where development decisions tend to go well or badly.

A vacant commercial plot on a well-established high street in Hackney, East London — a small infill site of around 100 square metres, sitting within the Chatsworth Road Local Shopping Centre. The building currently standing is a single-storey structure, formerly used as a restaurant or bar, now abandoned long enough for vegetation to have taken over. To the right, a four-storey mixed-use building with ground floor retail and nine flats above. To the left, a two-storey residential block.

The case for development is intuitive. The surrounding built form already reaches four storeys. The site is within an active local centre where the council explicitly wants to see active frontages reinstated. PTAL is 4, meaning public transport access is good. And Hackney has a clearly stated preference for small infill sites to contribute to its housing targets. On first reading, the site looks like a genuine opportunity — and it is.

The reflex move on a site like this is to work backwards from the permissible envelope and count units. Four storeys, 100 square metres footprint, ground floor commercial — three residential flats above, probably one per floor. Simple enough.

What that thinking skips is the gap between what the envelope permits in principle and what the footprint can actually deliver in practice. A 100 square metre plot is tight, but it is not unworkable. A three-bedroom flat designed to technical housing standards sits at around 74 square metres — comfortably achievable on a single floor once circulation and structure are accounted for. On a three-unit scheme, one three-bedroom flat is a reasonable and policy-aligned starting point, and Hackney's own guidance is explicit that the required mix will be assessed against site characteristics and viability. This is a policy written with precisely these kinds of constrained infill sites in mind.

The more practical question is not whether the mix is achievable, but whether the overall configuration — one floor per unit, one unit of each bedroom size — produces a scheme whose construction costs and policy obligations the gross development value can actually support. That is the analysis that matters, and the one that deserves the most rigour before an offer is made.

The constraint that most developers underweight on sites like this is not design — it is the affordable housing liability, and how far the economics can stretch to meet it.

For schemes of one to nine units, Hackney requires a contribution equivalent to 50% affordable housing, either on-site or as a payment in lieu. On a three-unit scheme, that means absorbing the equivalent of 1.5 units' worth of affordable provision from the gross development value of the remaining 1.5. On a site where construction costs are already elevated by the complexity of building tightly between two occupied properties — party wall agreements, potentially awkward foundations, a critical drainage area designation requiring SuDS attenuation — the margin available to absorb that contribution is real but limited.

This is the structural tension in the deal. The viability assessment submitted with any planning application will need to demonstrate what the scheme can genuinely afford to contribute. Hackney will scrutinise it. If the numbers don't reach 50%, the council may accept a reduced payment — but that negotiation takes time and introduces uncertainty. The key is to understand the likely outcome of that conversation before acquisition, not after.

Here is the reusable thinking this site illustrates: the visible question on a small infill is usually design or planning, but the decisive question is almost always viability arithmetic.

Sites that appear attractive because they sit within a permissive planning context — active frontage expected, housing supported, massing established by neighbours — are only half the picture. The other half is whether the quantum of development the footprint can realistically deliver is sufficient to absorb the cost structure and policy obligations the scheme will attract.

On a 100 square metre plot, you are working with perhaps 65 to 75 square metres of residential net internal area per upper floor, before circulation. Three floors of that, set against affordable housing obligations, elevated build costs, abnormal site conditions, and professional fees, leaves a residual land value that the acquisition price needs to sit comfortably beneath. That is a precise calculation, not a loose one — and it needs to be made before an offer is placed.

The biodiversity net gain obligation is worth flagging in this context, not as a problem but as a constraint with a workable solution. Because the site has been vacant long enough to develop dense plant cover, the planning authority will treat that vegetation as existing ecological value requiring compensation. A well-designed biodiverse living roof can satisfy that obligation — and on a four-storey building, it can simultaneously serve as the primary SuDS attenuation measure. That kind of constraint-doubling, where one design decision resolves two policy requirements, is where experienced developers find margin on sites that look thin on paper.

The most defensible approach on a site like this is to resist the temptation to maximise unit count and instead focus on delivering fewer, higher-quality units that can command a genuine premium. The Chatsworth Road area has a strong owner-occupier market alongside rental demand, and a well-designed, architecturally considered building — with generous internal spaces and a distinctive active shopfront — will outperform a scheme that squeezes numbers at the cost of quality.

The ground floor commercial unit should be kept flexible in its planning class. Consented as a Class E use — which covers retail, café, and office interchangeably — rather than tied to a specific use, it avoids unnecessary scrutiny under the evening economy policy and is significantly easier to let. A flexible commercial unit also strengthens the investment case for any forward-funding conversation.

The car-free requirement is not a constraint at PTAL 4 — it is simply the baseline. Cycle parking, designed well from the outset rather than retrofitted into an awkward corner, satisfies the transport planner and adds genuine amenity value for residents.

The honest tension in this site sits between planning confidence and financial precision. The planning case is strong: the policy context is supportive, the massing is contextually justified, and the mix of uses is exactly what Hackney wants to see on this stretch of high street. A well-prepared application has a clear path.

But planning permission does not make a scheme viable. The question is whether the residual land value, after all costs and obligations are properly accounted for, justifies the acquisition price being asked. On a small site with limited room to value-engineer your way out of trouble, that calculation needs to be right first time.

This is a site that rewards careful analysis over fast conviction. The planning path is cleaner than many comparable opportunities in East London, and the location — within an active local centre with strong policy support for reinstatement and housing delivery — provides meaningful backing for an application. The design constraints are manageable, the mix policy is pragmatic, and the biodiversity and drainage obligations have workable solutions.

What determines whether this is a good deal is not the planning — it is the land price relative to a fully-loaded appraisal. Get that right, and this is a genuine opportunity. Overpay, and the policy obligations will compress the margin to a point where there is no comfortable exit.

Small infill sites in local shopping centres can be consistently under-analysed because they appear legible. The neighbours have already established the form, the policy says yes in principle, and the development looks obvious. But accessibility cuts both ways — what makes these sites reachable for smaller developers is the same characteristic that makes the economics sensitive. Every pound of obligation comes off a narrower base.

The lesson is not to avoid sites like this. It is to appraise them with the same rigour you would apply to a scheme ten times the size. The planning here is genuinely supportive. Whether the deal works depends entirely on what you pay for it.

We work with developers and investors to assess sites before acquisition — combining planning strategy with spatial judgement to understand what is genuinely deliverable.

If you want a second view on a site, you can get in touch via [email protected].

I’ll be breaking down similar sites each week. If this kind of analysis is useful, you can subscribe to receive future issues.

The sites analysed are based on real opportunities currently or recently on the market, with identifying details adjusted.