Public Housing Insights: Cost opportunities and limitations of converting offices to housing

Partner
exigere

Public Housing Insights: Cost opportunities and limitations of converting offices to housing

As new models of delivery are needed to help drive London’s public housing quotas, the NLA’s ‘Homes for Londoners: A new agenda for public housing’ latest insight study points towards the models, partnerships and strategies that can unlock delivery at pace and scale.

Niall Aitken and Philippa Brown, both Partners at exigere, make the case for the alternative use of offices as demand for commercial spaces has waned. By referencing several case studies across London, they consider the opportunities, risks, and cost implications of re-purposing existing office buildings to provide much-needed housing.

How do we deliver first-class affordable residential buildings that meet modern-day living requirements within a viable framework?

Latest data from the GLA and Home Builders Federation indicates we are falling significantly short of housing targets in London. Planning consents, new starts on site and completions are at a near all-time low. The pipeline and backlog of projects not yet commenced is also at an almost record high. Several factors are creating this backlog, including viability, interest rates and the Building Safety Act, to name a few. It is not simple to point to one of the many factors affecting the apparent lack of progress, but the viability of schemes is a key issue.

One opportunity is to adapt or re-purpose existing office buildings to provide much-needed housing. The amount of vacant office space in areas of London (zones 5 and 6) where demand has waned since the Covid-19 pandemic is ever increasing. There presents a strong opportunity to look at alternative uses for these assets.

Earlier this year, the 1,000m² cap on Permitted Development Rights was removed, potentially allowing the conversion of larger-scale offices within certain areas and under certain planning authorities. This creates a wealth of opportunities for clients to re-purpose existing office stock.

It is not as straightforward a task as people may think, as there are a number of considerations and risks that need to be fully understood before proceeding:

Means of escape

Buildings with residential use above 18m must have a secondary means of escape. Even for buildings under 18m, a secondary escape may be required depending on the layout and the minimum escape distance of 7m.

New risers

Residential uses, especially studio or serviced apartment schemes, require many more slab penetrations for service routes. This is mainly due to the requirements for soil stacks, often resulting in structural strengthening works.

Sprinklers

In accordance with British Standards, residential buildings with a top storey more than 11 metres above ground level must be fitted with sprinklers. Typically, this applies to office conversions above ground level plus two storeys (G+2).

Fire rating of structure

Approved Document B outlines minimum fire resistance periods. Residential use tends to have stricter requirements compared to commercial use, and therefore potential upgrades need to be considered.

Thermal performance

Thermal upgrades are generally required to achieve the necessary EPC rating when converting from office to residential use. This can be achieved by insulating external walls from the inside face (which may reduce Net Internal Area), replacing windows or adding secondary glazing, or even replacing the full façade.

Higher Risk Building (HRB)

Buildings with at least two residential units that are 18 metres tall or have at least seven storeys are classified as higher-risk buildings. These buildings are subject to a rigorous

approval process, passing through three gateway points: planning, Building Control and completion stages.

External amenity

Providing external amenity space for converted residential units can be challenging. Balancing the impact on sales values against the cost and planning risks of providing this amenity is an important consideration.

What works well

• Generous structural slab-to-slab heights in comparison to residential

• Offices are designed to higher load tolerances

• Power in office use is typically sufficient to support residential

Cost implications

When considering the benchmarked costs for conversion schemes, the level of intervention required for your existing building is key. At the outset of a viability assessment, careful consideration of the design implications mentioned earlier is essential. Applying a blanket £/sq ft rate for retrofit conversion can be challenging, as the scope of required interventions significantly influences costs.

Early-stage discussions should focus on understanding the cost additions linked to these interventions. To achieve a ‘light intervention’ scheme, the building’s nature and design need to allow for conversion which inherently meets current regulations, particularly in terms of building height, escape routes, fire rating and core positioning.

For the purpose of the baseline cost, we have assumed an office building of three storeys with adequate thermal performance and a central core to meet minimum escape distances, with no requirements for sprinklers. The building achieves an 80% net-to-gross ratio and eight units per core for maximum efficiency.

Case studies

10-16 Bevis Marks

Planning Granted

Redevelopment of an unlet Aldgate office into 24 boutique serviced apartments, with retained structure, a green-roof rooftop extension, and active cultural/retail ground floor.

View project

Bedford Row

Planning Granted

Conversion of a Grade II-listed Bloomsbury building from offices to serviced apartments for True North, creating a high-end apart-hotel between the City and West End.

View project

St. Andrew’s House

Built

Residential-led project refurbishing 25 apartments in a three-storey Grade II-listed courtyard building, with a new plant room and a 16-person meeting room at the top level.

View project

Philippa Brown

Partner
exigere

Niall Aitken

Partner
exigere