Office-to-Residential Conversions Accelerate in London’s West End
**Research Shows 53% Surge in Applications for Office-to-Flat Conversions**
Foreign capital invested in London’s West End has lifted prices to record levels, but the property boom, some might fear bubble, is creating a problematic side-effect in the area. Fears are growing that attempts to cash in by converting offices into luxury flats are hurting small businesses, *The Times* reported on 26 November 2012.
The trend for conversions has been gaining pace during the last decade but now, owing to the rising values of prime London residential, it is also encompassing office spaces in relatively modern office blocks. According to new research by London-based property consultancy H2SO, in 2011, planning applications for converting offices to flats or homes in London’s West End increased by 53 per cent year on year, reaching 176 projects filed to Westminster City Council. In the cited period, a total of 101 conversion projects received planning consent, 38 of which were completed, resulting in the redevelopment of nearly 440,000 sq ft of office space to residential — a 116 per cent increase on the corresponding volume in 2010. In fact, according to H2SO research, even more office space was turned into homes last year as a result of successful planning permission applications granted by Westminster between 2008 and 2010 but carried out in 2011. Overall, last year, more than 600,000 sq ft of office space was lost to the residential sector, the consultancy firm estimates.
!m[Foreign Money Pouring into London’s West End Office Space Boosts Prices but Hurts Small Businesses](/uploads/story/900/thumbs/pic1_inline.png)H2SO partner, Paul Smith said: “20-th century office buildings that not very long ago would have been obvious candidates for redevelopment are now being earmarked for conversion to residential. As long as new prime residential in the West End Core can reflect capital values of around 30 per cent more than the corresponding value for offices, the case for conversion will remain compelling.”
**Trend Raises Concerns Amongst Small Businesses**
The new H2SO research concludes that between 2001 and 2011 more than 3.9 million sq ft of office space in the West End was redeveloped into homes, while 1.3 million sq ft was turned into hotel or other leisure uses. This trend in London’s West End real estate market has raised concerns over its impact on the business sector which may experience a shortage of office space in the area.
According to Mr Smith from H2SO, this accelerating trend of office-to-residential conversions, which further contributes to the historically low West End’s office development rates, can only put more pressure on office rent prices and leave businesses with a narrowing range of choice.
These fears have also reached Westminster, which according to The Times is so concerned that is considering a formal consultation that could lead to tighter restrictions on property conversions. Rosemarie MacQueen, its strategic director for the built environment, said: “We have a problem where residential conversions are taking place but no one is living there. The flats are being held by people who need somewhere to put their money.”
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