Supply and Demand Imbalance for Living and Life Sciences Sectors Drive Secondary Office Repurposing

• Almost 6m sq ft of office stock has been sold for repurposing between 2022-2024
• Life sciences is the largest sector for intended office conversion
• All offices purchased for conversion in Birmingham focused on education, and hotels in Edinburgh

New research from CBRE has found that 5.9m sq ft of UK office stock* was sold between 2022 and 2024 for £3.44bn, with the intention of converting to a range of alternative use types.

Predominantly driven by the growth of other sectors and evolved ways of working, the dominance of offices by real estate investment performance has reduced. According to CBRE’s research, offices accounted for 44% of total UK real estate investment a decade ago, compared to 26% over the past five years. 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.

As a result, some lower quality offices that have remained vacant for long periods are being repurposed for other uses. In London, 3.3m sq ft of stock at £2.5bn was sold between 2022 and 2024 for conversion to life sciences, hotels, student accommodation and wider residential assets.

Outside the capital, 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 circa 1m sq ft of office stock for conversion across the two markets. The London market saw a similar trend at circa 1.2m sq ft. CBRE’s data shows that life sciences ranks as the largest sector for intended office conversions during the last three years.

In Birmingham, the dominant alternative use type has been education, with all but one being acquired by education providers themselves, to convert into new facilities. The remaining sale was earmarked for student accommodation, an indicator of Birmingham’s position as a thriving university city.

Edinburgh saw five office sales for conversion during the time period, all of which were tipped to become hotels. Outside of London, Edinburgh has repeatedly received more inbound overnight visitors than any other UK city, with room occupancy rates hitting over 84% last year.

All of the other cities referenced in the report (Aberdeen, Bristol, Glasgow, Leeds, Liverpool, London and Manchester) saw offices purchased with the intention to become residential, totalling 1.2m sq ft. According to CBRE’s research, residential was the alternative use seen most broadly across the UK cities.

The repurposing of offices still represents a limited proportion of the market.