CANNES, France — The UK commercial real estate market has “reached peak office”, with the future of investment in commercial real estate to be focused on “quality not quantity”, M&G Real Estate Head of Investment Strategy Jose Pellicer said at the MIPIM real estate conference in Cannes.

Speaking during a session on the London Stand at the event, Pellicer said that major city centres, including London, would be faced with the need to repurpose some of their existing commercial space, largely into living accommodation.

“The 2020s have created a real challenge for office investment, as a consequence of the growth of hybrid working post-Covid, and this leads to a real question over what the fabric of urban centres should be going forwards," he said.

"After a period of globalisation and urbanisation, we have a built environment that has largely been created for work. But we need to work out what the cities of the next 20 or 30 years are going to look like."

Pellicer said that in order to keep people in cities, converting former office space into residential would be one way of retaining people in urban centres and fostering talent, so that younger generations lived and worked in the same areas.

However, while Pellicer said that M&G, which has £34B of real estate assets under management, would continue to invest in the London office market, its strategy had realigned in the wake of the changes created by hybrid working and what this would mean for existing central business districts.

“We have made a big bet on investing in better quality but fewer offices. Our criteria going forwards is to invest in office spaces that have been designed to allow people to meet and collaborate and they must also be on the path to net zero,” he said.