Our research analysed 32 regional markets and found that 27% of total regional availability is obsolete (11.7m sq ft) and of this stock 7.4m sq ft is suitable for conversion.
Modern workplace trends change occupier requirements
Explaining why we have so much obsolete office stock, Tony Fisher, National Head of Office Agency said: “Modern workplace trends have changed office occupier’s requirements – they need flexible, open plan space and crucially less of it. In the last 20 years, the amount of allocated space per person in an average UK office has halved.
“Office occupier requirements will continue in this vein, meaning any stock that does not meet modern workplace trends is unlikely to ever be let again and while not every obsolete building can be converted a fair proportion could be.”
Planning permission no longer needed for office to residential conversion
Tony continued: “In the past getting planning permission to convert an office into residential accommodation could be costly and time consuming. This is no longer the case in England following the government’s recent announcement that they will allow office space to be converted without planning permission.”
The incentive to convert is greatest in London, where the gap between office and residential values is highest. However, the gains to be made from conversion are substantial across the UK. Average capital values for UK residential space are approximately £155 per sq ft, compared to average secondary and tertiary office values which range from £30 to £80 per sq ft.
Top five regional centres with greatest conversion opportunities
Our top five centres from the 32 we analysed, where there are buildings in the right locations, with suitable layouts and residential demand are:
Tony said: “Put simply, obsolete office space is a drag on our market and offering investors and developers little or no value. However, the return from converting to residential accommodation is far greater and with the headache of planning permission now removed from England the conversion route is an obvious step for any investor or developer and would go some way towards providing additional homes for our already over-crowded nation.”