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Owner preps hotel switch for office with one offer in four years

News

Tim Burke

16 October 2024

Hotels, Leisure, Offices

Southwark Council is set to sign off plans to turn an office block that has had just one offer from an occupier since 2020 into a hotel.

Create Asset Management wants to turn the vacant six-storey block at 291-299 Borough High Street, SE1, into a 47-bedroom hotel.

A planning statement from Newsteer noted that several applications in the late 1990s to turn part of the building into homes had been refused on the grounds of “unacceptable loss of business space and employment opportunities to the detriment of the borough’s economic base”. But in recent years the landlord has struggled to attract any interest in the space.

BBG Real Estate Advisers has been marketing the office since 2020 but has received just one offer for the property, from serviced operator Breezblock, which “did not progress”.

“Based on the supply versus demand within the local market, there appears to be a large and increasing overhang of supply of alternative space in the South Bank East area and it is BBG’s view that the building could remain empty for a considerable period,” Newsteer said.

It added: “Continued marketing has led to some enquiries, with few viewings, however there has been no serious interest. The general reaction from the market has been that the building is not in a recognised office location, with occupiers typically favouring to be closer to London Bridge.”

In a separate report, however, Savills said that a hotel on the site “would be well received in the market [due to] the prime location, quality of the proposed development and strength of demand drivers in the Southwark market and would result in a good selection of offers from a variety of operators on multiple bases”.

Southwark planning officers have recommended the project is approved at a meeting on 23 October.

Hotels are an increasingly popular alternative use for owners of empty or second-tier offices. LaSalle Investments has put 29 Clements Lane, EC4, up for sale for £30m, pitching it to buyers as a possible hotel conversion. Last month, Bastardo Hostel, a Madrid-based hospitality brand, said it was looking for London offices that it could turn into hotels as part of its UK debut.

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Borough High Street, office to hotel

Southwark Council is set to sign off plans to turn an office block that has had just one offer from an occupier since 2020 into a hotel. Create Asset Management wants to turn the vacant six-storey block at 291-299 Borough High Street, SE1, into a 47-bedroom hotel. A planning statement from Newsteer noted that several applications in the late 1990s to turn part of the building into homes had been refused on the grounds of “unacceptable loss of business space and employment opportunities to the detriment of the borough’s economic base”. But in recent years the landlord has struggled to attract any interest in the space. BBG Real Estate Advisers has been marketing the office since 2020 but has received just one offer for the property, from serviced operator Breezblock, which “did not progress”. “Based on the supply versus demand within the local market, there appears to be a large and increasing overhang of supply of alternative space in the South Bank East area and it is BBG’s view that the building could remain empty for a considerable period,” Newsteer said. It added: “Continued marketing has led to some enquiries, with few viewings, however there has been no serious interest. The general reaction from the market has been that the building is not in a recognised office location, with occupiers typically favouring to be closer to London Bridge.” In a separate report, however, Savills said that a hotel on the site “would be well received in the market [due to] the prime location, quality of the proposed development and strength of demand drivers in the Southwark market and would result in a good selection of offers from a variety of operators on multiple bases”. Southwark planning officers have recommended the project is approved at a meeting on 23 October. Hotels are an increasingly popular alternative use for owners of empty or second-tier offices. LaSalle Investments has put 29 Clements Lane, EC4, up for sale for £30m, pitching it to buyers as a possible hotel conversion. Last month, Bastardo Hostel, a Madrid-based hospitality brand, said it was looking for London offices that it could turn into hotels as part of its UK debut.