Unwanted offices get new role in real estate shift – Daily Business

A glut of lower grade offices are being snapped by developers to convert into hotels, flats, laboratories and student accommodation in the one of the biggest shifts in the real estate sector for years.

Deals totally almost £3.5 billion have seen offices across the UK converted to other uses over the past three years, usually older stock that is not able to meet current environmental demands or the requirements of flexible working patterns.

Property agent CBRE says that between 2022 and 2024, 5.9 million sq ft was sold to developers for conversion as occupiers seek better quality “Grade A ” stock. Newly-built offices often provide amenities such as gyms, cycle parking and outdoor rest areas and the best of the older stock can be converted to do so.

Landlords are left struggling to let secondary space which is now looking to be repurposed or even demolished.

Colin Thomasson, head of UK investment properties at CBRE, told The Times there was a “significant shift in the UK real estate landscape”.

He added: “Repurposing secondary office assets into vibrant, multifaceted spaces where office demand is weaker, or there is a demand-supply imbalance for other asset types such as living or life sciences, is a viable solution to satisfying demand.”

Requirements differ from location to location. In Bristol, Glasgow and Leeds residential is the dominant alternative use type, with Glasgow in particular seeing an explosion in student and build-to-rent accommodation.

Mosaic Architecture + Design recently completed the redevelopment of the former NHS Glasgow head office at Dalian House overlooking the M8 into 92 residential flats.

In Edinburgh five offices have been sold for conversion since 2022, all of which are set to become hotels amid a post-pandemic recovery in tourism.

Whitbread, the Premier Inn owner, bought Capital House whose occupant BNY Mellon earlier this year confirmed plans for 150 job cuts and the relocation of its remaining staff to smaller offices.

In Cambridge, Oxford and London there is a demand from life science companies for offices to be converted into laboratories.

In Birmingham Aston University bought Birmingham city council’s former headquarters for £25 million, which it is converting into education space for its business, law and science schools.

Questions have been raised about swatches of empty offices at the Gyle, Edinburgh where some units have been used as temporary homes for arts activities.