Start with the exit position

Before any design or technical work begins, clarity on the target exit profile is non‑negotiable. Defining the likely buyer, hold period and capital strategy at the outset shapes every decision that follows – from whether an asset is best held as office, repositioned as hospitality, or converted to a mixed‑use or science‑ready building. When market conditions, location dynamics and exit strategy are aligned early, feasibility work, ESG upgrades and design choices all pull in the same direction and support a credible, financeable business plan.

Why transform?

Hybrid working and flexible office models are now structurally embedded, driving a persistent gap between prime, highly sustainable space and an increasingly obsolete tail of secondary stock. At the same time, net zero commitments, MEES thresholds and rising occupier expectations around amenity and wellness mean many older buildings cannot simply be re‑let without significant intervention. Against this backdrop, owners are increasingly looking at alternative uses – including hotels, aparthotels, flex workspace and labs – where location, floorplates and planning policy allow.

Feasibility and Planning

London remains a focal point, combining deep office stock with global demand for hospitality and other income‑producing uses. Recent policy evolution has shifted from pure protection of office floorspace towards a “retrofit first” approach, particularly in the City Plan 2040, which prioritises re‑use and sets out clearer routes for the loss or reconfiguration of office floorspace where appropriate. Boroughs are more open to change of use where applicants can demonstrate redundancy of older offices, deliver high quality new accommodation and align with sustainability and town centre policies, but planning risk and local interpretation remain critical considerations.

The role of hospitality and alternative uses

Over the past few years, hotel and hospitality demand has rebounded strongly, with office to hotel and aparthotel opportunities now accounting for a meaningful share of UK hospitality transactions and that momentum continuing into 2025. Core cities such as London and Edinburgh are seeing a sustained pipeline of office assets being acquired or repositioned for hotel, aparthotel and extended stay use, supported by strong visitor demand, transport connectivity and more flexible attitudes to repurposing underperforming offices. However, not every office is a natural candidate for hospitality; building depth, cores, servicing, rights of light and competing alternative use value – for example, life sciences, flex workspace or residential – still need to be rigorously tested at feasibility stage to ensure that a hotel‑led strategy genuinely maximises value.

Design and delivery

Adaptive reuse now sits at the heart of many business plans, retaining embodied carbon, shortening programmes and reducing waste versus full demolition and rebuild. In practice, this requires integrated teams who can interrogate the existing structure, model operational energy (including NABERS or similar where relevant) and embed ESG outcomes – such as whole‑life carbon, circularity and social impact – into design briefs and consultant appointments from day one. For hospitality and flex space, digital infrastructure (guest apps, keyless access, building analytics) and experiential design are just as important as the base build in protecting value at exit.

Funding and viability in a higher-rate world

Higher interest rates and tighter credit conditions mean funders are scrutinising business plans, ESG performance and exit routes more closely than in the last cycle. Mixed equity‑and‑debt structures, operator partnerships and forward‑funding arrangements are increasingly common, but lenders and investors want robust sensitivity testing around rents, capex, programme and exit yields, particularly outside core locations. Assets in prime or strategically important locations with a clear retrofit story and resilient income profile continue to attract capital, while poorly located secondary stock without a credible transformation route risks becoming stranded.

Future outlook

As cities move towards 2030 and 2040 climate targets, retrofit‑led asset transformation will remain central to urban regeneration strategies. Expect more schemes that blend hospitality, workspace, leisure and residential to diversify income and future‑proof against changing demand, alongside a sharper focus on operational performance, guest/occupier experience and digital capability as value drivers. For owners, starting with a clear exit position – and aligning planning, design, ESG and funding decisions to that target – is increasingly the difference between stranded risk and long‑term opportunity.

Conclusion

Asset transformation is no longer a tactical response to short‑term disruption, but a core strategy for protecting and growing value in a structurally changed market. Owners who define their exit position early – and then align planning, retrofit, ESG and funding decisions around that target – are best placed to turn obsolete offices into resilient, income‑producing assets, whether that is hospitality, flex workspace, labs or truly future‑proofed offices.