Over £3.4bn of offices sitting in secondary locations, that have changed hands over the past three years, have been converted into alternative use facilities, according to CBRE.
The consultancy found that 5.9m sq ft of workspace, across the 11 markets of Aberdeen, Birmingham, Bristol, Cambridge, Edinburgh, Glasgow, Leeds, Liverpool, London, Manchester and Oxford, have been transacted between 2022 and 2024 for conversion to life sciences, hotels, student accommodation and other residential developments.
The move comes amid evolved ways of working. The most recent data from CBRE has tracked that, over the past five years, offices accounted for 26% of total UK real estate investment versus 44% a decade ago.
In contrast, investment into science-related real estate has peaked during the pandemic amid exponential growth of the occupiers in the sector and limited supply of research and development facilities.
In addition, the emergence of multifamily housing has boosted residential investment volumes to £11bn, on average, per year, during the last five years, as the living sector continues to evolve.
Colin Thomasson, head of UK investment properties at CBRE, said: “Our research underscores a shift in the UK real estate landscape. 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.”
CBRE’s research has showed that secondary offices in London, Cambridge and Oxford have seen the greatest degree of intended office conversions by sq ft, with life sciences sector named as the greatest beneficiary.
In Birmingham, most of the offices in secondary locations are being converted into education spaces, with all but one being acquired by education providers themselves. Furthermore, redevelopment of offices into student accommodation has also been named as a trend in the city.
Edinburgh saw five office sales for conversion during the three-year period, all of which were tipped to become hotels. According to CBRE, Edinburgh is the second city in the UK after London to repeatedly receive more inbound overnight visitors than any other UK city, with room occupancy rates hitting over 84% last year.
In all of the other cities, Aberdeen, Bristol, Glasgow, Leeds, Liverpool and Manchester, office-to-residential conversions dominate across the secondary locations.
Simon Brown, head of UK office research at CBRE, said: “Conversion to other asset types is not the only answer to repurposing secondary offices, as the office market itself is becoming more polarised.
“The ability to source, and secure, grade A office space is difficult for occupiers, who often find themselves turning to the development pipeline for a solution. Building quality and office location are of the priority and, as such, secondary office space presents opportunities for those that are happy to refurbish, as opposed to build.”
Image: Alexander Pohl/Shutterstock
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