Living and life sciences sectors drive secondary office repurposing
Almost six million square feet of office stock in the UK was sold for repurposing between 2022-2024, according to real estate firm CBRE.
The company said that offices accounted for 44% of total UK real estate investment a decade ago, compared with 26% over the past five years. The emergence of multifamily housing has boosted residential investment volumes to £11 billion on average per year during the past five years, as the living sector continues to evolve.
As a result, some lower-quality offices that have remained vacant for long periods are being repurposed for other uses, said CBRE.
In London, 3.3 million square feet of stock worth £2.5 billion was sold between 2022 and 2024 for conversion to life sciences, hotels, student accommodation and wider residential assets.
Life sciences estates
Cambridge has seen the greatest degree of intended office conversions by square footage, followed by Leeds and Oxford. Life sciences has been the greatest beneficiary in both Oxford and Cambridge, demonstrated by the purchase of around a million square feet of office stock for conversion across the two markets. The London market saw a similar trend at around 1.2 million square feet. CBRE said its data showed that life sciences ranked as the largest sector for intended office conversions during the past three years.
In Birmingham, the dominant alternative use type has been education, while Edinburgh saw five office sales for conversion during the period, all of which were expected to become hotels.
According to CBRE’s research, residential was the alternative use seen most broadly across UK cities, although the repurposing of offices still represents a limited proportion of the market.
Colin Thomasson, CBRE head of UK investment properties, said the research underscored a significant 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,” added Thomasson.