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Nearly 6M SF of UK office stock was sold for conversion between 2022 and 2024 for a total value of £3.4B, led by a surge in London.
There was 3.3M SF of stock sold in London between 2022 and 2024 for a total of £2.5B for conversion to life sciences, hotels, student accommodation and other residential uses, according to research from CBRE.
Outside the capital, Cambridge saw the highest intended office conversions by square footage, followed by Leeds and Oxford.
Life sciences ranked as the largest sector for intended office conversions over the last three years. It was the greatest beneficiary in London, with 1.2M SF, and topped the list in both Oxford and Cambridge.
In Birmingham, the dominant alternative use type was education, with all but one property acquired by education providers to convert into new facilities. Edinburgh’s five office sales for conversion during the period are all expected to become hotels.
The survey covered 11 UK cities: Aberdeen, Birmingham, Bristol, Cambridge, Edinburgh, Glasgow, Leeds, Liverpool, London, Manchester and Oxford.
Overall investment in offices has slumped in comparison with other asset classes, accounting for 44% of total UK real estate investment a decade ago but just 26% over the past five years, CBRE said.
Repurposing of offices still represents a limited proportion of the market, according to CBRE head of UK office research Simon Brown.
“Conversion to other asset types is not the only answer to repurposing secondary offices, as the office market itself is clearly becoming more polarised,” Brown said in a statement. “The ability to source, and secure, grade A office space is acutely difficult for occupiers, who often find themselves turning to the development pipeline for a solution. Building quality and office location are of the highest priority and, as such, secondary office space presents opportunities for those that are happy to refurbish, as opposed to build.”
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