The Intermediary –- June 2026 - Flipbook - Page 69
SPECIALIST FINANCE
Opinion
Successful
conversions start
with preparation
R
ising construction
costs, tighter
regulations, and
questions over
financial viability
have slowed newbuild activity. At the same time,
demand for secondary office space has
dropped sharply, driven largely by the
rise of hybrid working.
As a result, more older office
buildings are coming to the market.
Many of these assets are outdated and
unable to meet evolving standards
without substantial investment,
creating a clear opportunity for officeto-hotel conversions.
According to Colliers’ 2026 UK
Hotel Market Index, Edinburgh
has occupancy around 84.6% and
an average daily rate (ADR) of £165.
London has 81.2% occupancy and the
highest ADR at £194, highlighting the
ongoing appeal for hotel investors.
While office-to-hotel conversions
are not new, the pace has accelerated
since the pandemic. As businesses
move into smaller, more flexible office
spaces, larger and older buildings –
oen in less central locations – are le
without natural occupiers.
Converting offices into hotels,
however, is far from straightforward.
These structures were never designed
for hospitality. Developers must tackle
challenges such as reconfiguring
layouts, upgrading utilities, and
meeting regulations for an entirely
different type of occupant. Heritage
considerations add another layer
of complexity, with listed features
needing careful preservation.
Success in these projects begins with
preparation. Early-stage due diligence
is essential for understanding a
building’s performance, testing
existing systems, and identifying
potential risks. Surveys and specialist
ZANDER MUEGO
is director at Egis UK
input from engineers, heritage
consultants, and environmental
experts help establish a realistic brief.
Consideration of energy performance
objectives within the constraints
of structural and physical limits is
particularly important
By developing a clear brief at
the outset, developers can make
informed decisions and avoid costly
surprises. Thorough oversight ensures
that regulatory standards are met,
heritage features are respected, and
commercial objectives are aligned.
For developers and investors, the
key is balancing financial returns
with technical and regulatory
hurdles. With careful preparation
and management, these conversions
can unlock long-term value, absorb
surplus office space, and enhance a
city’s hospitality offering. ●
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