Office occupancy in London is slowly recovering, but at around 37% of pre-pandemic levels, the city’s workplaces are still far from full. The shift is clear, and it’s here to stay. More than four years after pandemic measures ended, hybrid working has become the norm, replacing the old five-day commute with a more flexible rhythm of time split between home and the office. While central London and some emerging submarkets are thriving, outer London is not seeing the same rebound, raising important questions about how underused space can be reimagined for the future.
While offices in the West End and City of London maintain occupancy rates of 55 – 60%, areas like Hammersmith are struggling with rates as low as 25 – 30%. London’s office market has split into winners and losers – and the divide is growing.
What’s driving this dramatic split in fortunes? It comes down to a simple truth: location and quality matter more than ever.
Central London’s prime spots continue to attract businesses with their prestige, accessibility, and amenities – the kind of spaces that justify the commute in our hybrid-working world.
Meanwhile, many outer London offices belong to a different era. Built during expansion booms, these buildings now struggle with outdated designs that can’t meet modern expectations.
And then there’s the regulatory challenge. New standards require all non-domestic buildings to achieve an Energy Performance Certificate (EPC) rating of at least B by 2030 to be legally rented out. Upgrading London’s inefficient office stock to meet these standards could cost around £370 million in Central London alone.
For prime Central London properties, the investment will make sense. High rental income means landlords can recoup their upgrade costs in as little as three years. But for struggling outer London offices, especially those with the poorest energy ratings, these costs could prove to be the final nail in the coffin and leave many assets stranded and unable to contribute to their local economies and communities.
Here’s where this story of decline becomes one of opportunity. London currently has about 30 million square metres of office space, with vacancy rates climbing to 10 – 15%. But what if we could transform some of that empty space into something the city desperately needs: homes?
If just 10% of London’s office space is genuinely surplus to requirements, we’re talking about 3 million square metres that could potentially become around 40,000 new homes.
But making this transformation happen requires more than good intentions. It needs smart policy and clear thinking. Our new report in partnership with CBRE, From Vacancy to Vitality: Repurposing London’s Secondary Offices for Housing, sets out five recommended shifts in approach:
- Defining a healthy vacancy level: The London Plan should set out a target of 5 – 10% vacancy across London’s office stock to give the market room to breathe and adapt.
- Getting the data right: Without standardised tracking of office use and vacancy, we lack a clear view of London’s markets. Accurate data, paired with realistic employment forecasts, is essential to understand supply, demand, and submarket trends.
- Cutting through red tape: Clearer guidelines for marketing requirements and defined time limits can prevent viable conversions from getting stuck in bureaucratic limbo.
- Being honest about the economics: Not every office building can or should be saved. Viability assessments help identify which spaces are worth upgrading and which should find new purposes.
- Prioritising homes: Where office space genuinely isn’t needed anymore, residential conversion should be the go-to solution.
The pandemic didn’t just change where we work – it gave us a chance to reimagine how our city works. London’s empty office stock is raw material for urban renewal.
The good news is that momentum is building. The Greater London Authority’s consultation on the new London Plan acknowledges these challenges and signals a more flexible approach to repurposing underused commercial space. By implementing our five key recommendations, the capital can unlock new opportunities to address its housing crisis, transforming underutilised spaces into vibrant communities where people can live and thrive.