Businesses are finding it harder to secure office space in the West End of London according to recent reports – as the number of offices being converted to residential space surges.
According to research by property consultants H2SO, the number of applications from those wishing to transform offices into luxury flats has increased by 53% in 2012 when compared to 2011.
Driven by high levels of foreign investment, this activity has reportedly resulted in over 3.9 million sq. ft. of West End offices making the switch since 2001, with an additional 1.3 million sq. ft. of space being turned to hotel and leisure space.
While such activity demonstrates the strength of the residential market in the West End, it raises concerns for small businesses operating within the area who could find themselves forced out as more and more landlords seek to ride the residential resurgence.
“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.” explained Paul Smith, partner at H2SO who carried out the research.
“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.”