On a busy high street in Balham, south London, stands a boxy, beige-fronted building. Built in the 1940s, for decades the four-storey office block was home to hundreds of civil servants until Department for Work and Pensions officials moved out in 2020.
Now, Irene House boasts 77 one- and two-bedroom upmarket apartments with seven more homes inside a roof extension. It still has its art deco entrance and other features inspired by the building’s original interior, and represents a growing trend: to convert office blocks into homes.
The project might appear an example of how to solve the housing crisis, in a post-pandemic era when increased working from home has made offices less appealing and demand for accommodation remains high, but the reality is much more complex.
There has been a surge in applications for office-to-residential conversions since the lifting of an office space limit last March. However, architects say they can be daunting and costly with challenges around deep floorplates and a lack of natural light.
The ultimate office conversion is the transformation of the opulent Old War Office in Whitehall, Winston Churchill’s base during the second world war, into a 120-room Raffles hotel and 85 luxury flats in a £1.2bn project – albeit without any affordable housing.
Centre Point, the landmark 1960s office tower in central London, was also revamped as luxury housing in 2018, with 13 socially rented flats in a separate low-rise block. In Chiswick, an 11-storey office tower known as Empire House has just been converted into 121 homes starting at £625,000, despite local opposition.
Shivani Goolab, head of private client lending at Investec Real Estate, which provides funding to developers, says: “As specific office values come down, it makes a lot more sense to revisit some of these offices for redevelopment.
“The key to it is not just thinking that you’re in an office building with some beds in it. It’s important that these are proper apartments that are desirable to live in.”
The demand for office space, and its value, has fallen since the pandemic led to a major shift in working patterns, with many people now splitting their time between home and the office.
While office values turned positive across Europe between July and September after months of write-downs, rising by 0.5%, UK offices recorded a further drop in values, of 2.6%, according to data from property analysts at Altus Group. Only a handful of London office buildings sold for more than £100m in the first half of 2024.
About 9% of offices across London stand empty, mainly older lower-quality buildings, reports the property company Knight Frank. Vacancy rates in the capital range from nearly 20% in Hammersmith and 16.8% in the Docklands to 9.5% in central London, according to the data firm CoStar Group.
Meanwhile, vacancy rates for the newest offices are near record lows, showing there is still demand for high-quality, sustainable “prime” office space.
But for older buildings, developers face a choice between revamping them as green offices, or turning them into homes and mixed-use buildings.
Bettina Brehler, head of sustainability and a partner at the architects Squire & Partners, is working on an office-to-homes conversion and says the firm has received several similar requests in recent months. Whether the conversion works ultimately depends on the type of office building.
“Converting the Canary Wharf towers with their trading floors and deep floorplates, or when you only have one staircase, that’s very challenging,” she says. “But buildings with two staircases, especially low-rise 50s or 60s office buildings, that don’t have the floor-to-ceiling height required for modern offices, can more easily be converted to residential,” she says.
While some of these projects are built with full planning permission, more than 121,000 flats have been created in England since 2013 under “permitted development rights” (PDR). They allow developers to convert commercial buildings without full planning consent, and there is no requirement for affordable housing. Many of these schemes are on industrial estates or business parks, with complaints of poor ventilation and no access to private outdoor space, according to a government-funded report in 2020.
In opposition, Labour had vowed to scrap what it called “slum housing” schemes. But when the government published its national planning policy framework in December, there was no reference to banning PDR. They will boost Keir Starmer’s drive to build 1.5m new homes in England but have been labelled a “free-for-all” for developers.
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In past years, PDR resulted in thousands of “dark rabbit hutches” being built – small flats below national space standards, some without windows and “frankly unfit for living in”, says Urbanist Architecture’s founder and managing director, Ufuk Bahar.
The Conservative government finally took action in 2020, requiring homes created in this way to have natural light, and with national space standards applying to them from April 2021.
In March, further rule changes – the removal of the 1,500 sq metre cap on conversions – led to a jump in applications, and a variety of large schemes emerging across 12 London boroughs. Until then, large offices could not be converted into flats.
Applications climbed to 3,272 in London between mid-March and mid-November, according to a Knight Frank analysis of Molior London data. This is 58% higher than in the same period in 2019, before the pandemic.
The insurer Zurich UK has warned that conversions must be “done properly”, saying: “Poorly designed and built conversions … could create swathes of homes which are vulnerable to more frequent heatwaves and hotter UK summers.”
“Office-to-residential change of use should require planning permission, to ensure the housing being created is of adequate quality and in the right location to promote health and wellbeing and there is a level playing field ensuring no loss of affordable housing or infrastructure contributions,” says Ben Clifford, professor of spatial planning and governance at University College London’s Bartlett School of Planning and co-author of the 2020 report. “We have failed to proactively say what good looks like for such conversions in England.”
Goolab says office-to-residential conversions work well for lower-rise buildings in commuter towns such as Hayes and Basingstoke, but also for some older offices in London’s West End that were originally townhouses and were converted to offices.
Office towers are trickier. “There’s a few towers around where you can probably put the residential on the outside, but then what do you do with the core?” Goolab says. “A few purpose-built student accommodation providers have looked at that.”
It takes about 18 to 24 months to turn an office into 100 flats, she adds, with the benefit that groundworks are not needed. By comparison, new-build homes sites outside London of between 100 and 499 units take, on average, 30 months, according to the planning and development consultancy Lichfields.
Abigail Heyworth, partner in development strategy and finance at Knight Frank, says it is not just empty offices that are candidates for redevelopment, but also those whose leases run out in the next couple of years. Another factor is that 70% of commercial floor space in England and Wales has an energy performance certificate (EPC) rating below B, and by 2030, all offices need to have a rating of B or above.
David Weatherhead, design principal at global architecture practice HOK, which designed the Francis Crick Institute in London, is sceptical about office-to-residential conversions. He says that aside from the technical challenges, financial viability will be an obstacle, due to regulations, the cost of cladding and high construction costs.
“I can’t see how we’re going to see many city centre schemes come forward,” he says, arguing that office retrofits often make more sense – or turning them into hotels, student digs or laboratories for life-science firms.
