Following the introduction of new rules allowing the easier conversion of offices to homes, a number of new residential properties started appearing in disused workspaces.

In 2013 the new permitted development rights were introduced allowing some conversions to take place without the need for planning. It led to around 6 million sq ft of office space being converted into around 7,600 homes in 2014, according to the British Council for Offices.

And many of the new homes are high-end, says Mark Dorman, Partner in Strutt & Parker’s London Residential Development and Investment Department.

“If you wanted to buy into a high-end development with leisure facilities, I could take you on a tour of 15 or 20 central London properties that were offices and are now residential. A decade ago, there would only have been 2 or 3,” he adds.

Where did it all begin?

While the new planning legislation is a relatively new addition, it’s believed the current trend began as far back as 2008, when the financial crisis hit.

At the time, both housing and office rents took a major hit, but prime housing quickly returned to health. It was a different story for office rents, though, which continued to remain low.

This situation made a change of use from office to residential an appealing option for developers. Many started to convert existing office buildings, while others created new-builds on sites where the existing office buildings had been demolished.

Westminster’s Great Minster House - once the home of the Department for Transport – was given a high-spec makeover as 61 apartments, while Burlington Gate is a completely new 42-home development on the site of a 80s office block in Mayfair.

More choice for buyers

This new type of housing has added a bit of variety to the buyers’ market, offering homes that have something a bit different.

“The good thing about converting an office building is you get much better floor-to-ceiling heights and original features that add character,” says Charlie Baxter, Managing Director of Alchemi Group.

“You’re constrained by where the windows are, so that often helps to create over-sized apartments,” he adds, referring to developments like Alchemi’s 55VS in Victoria, which offers loft-style apartments with 2.9m-high ceilings. “You just can’t get that in a new-build in central London.”

Turning point

Like most trends in construction and development, eventually you hit a brick wall as the land runs out. And while the permitted development rights proved so popular they were made permanent last year, there are only a limited amount of old offices in London that can be converted.

“There’s a finite supply of the right kind of building,” says Anna Cartledge, Senior Associate in the planning team at law firm Shoosmiths.

What developers are really want is the flexibility that comes from designing and constructing completely new residential projects, she says, adding that “this might allow for higher-density, high-rise development.”

And while the supply of old offices is running low, the demand for quality workspaces is – finally – rising again. Renewed demand for commercial space, combined with weaker supply, has driven office rents and values to levels unseen since 2008, according to the British Council for Offices.

From a buyer’s point of view, Mark Dorman doesn’t think that’s a bad thing.

“The good developers will remain in the market and compete for fewer locations,” he says. “So they will have to build better and better product.”