Recent surveys suggest that developers have a plan for office space lying vacant in London's Square Mile. Unused office buildings are being converted to plush loft apartments.
As the office take-up by companies in the banking and financial sectors has dropped off in the present economic environment, developers are being forced to explore new options that allow them to realize a return on their investment.
As close to 50 per cent of office space in the City is over 15 years old, it does not fall in the 'prime' category, making marketing quite a tough task. According to Deloitte LLP's research team, developers will continue to look at alternative uses of unoccupied office buildings in the City of London. Some of the country's leading homebuilders, including Berkeley and Axa Real Estate have development and renovation plans in the pipeline.
A way of improving the value of old office buildings is to convert them to residences. For instance, the values of homes in the vicinity of St. Paul's Cathedral are up to 15per cent higher in comparison to equivalent offices in the same area. As far as home prices are concerned, City of London attracts £650- £1,350 a square foot. Knightsbridge, Belgravia and Mayfair lead the list of 'highest price per square foot' in the capital city.
The gloomy economic climate and the low levels of office letting could impact office rents and values. JPMorgan Chase expects rents to fall by 4 per cent to 6 per cent this year, while office property values are forecasted to drop off by almost 7.3 per cent.