Record level of offices turned into residences

 
Kasmira Jefford
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THE NUMBER of offices being converted into homes is set to jump significantly over the next two years as developers chase higher returns for their property, according to property services firm DTZ.

Strong growth in London residential values and weak demand for secondary office property is prompting developers and landlords to turn tired office blocks into prime living space.

The report by DTZ published yesterday shows that planning permissions for conversion to residential units in central London reached 2,197 in the first nine months of the year, up from 1,178 units for 2011 in total.

As a result, DTZ predicts the number of scheme completions to jump by 12 per cent next year to 1,350 units compared with the previous year and by 18 per cent to around 1,600 units in 2014.

The West End has traditionally seen the highest rate of conversions, where residential values range up to £3,250 per square foot compared to prime office values of around £2,100 per sq ft.

But the City and its outskirts is seeing a rapid pick-up in residential schemes, including CIT Group’s King’s Reach Tower scheme, and is set to account for 40 per cent of total units delivered in 2013-2014.