More and more landlords are considering converting offices into residential apartments.
Yet, achieving a return on these projects is by no means guaranteed if the development is not carefully planned, thoroughly researched, executed to a quality finish and within a set budget.
So, how can you maximise your returns when converting offices to residential apartments?
Why convert offices?
At Cortec, we’ve been helping landlords realise returns on office conversions since before the planning laws were relaxed in 2013.
It was a harder slog then, but it could still realise some very healthy returns.
Since 2013 the burden of seeking planning permission before undertaking office conversion projects has been removed. As a result, applications for conversions across the UK have almost doubled.
And it’s really not surprising.
The UK is deep within a housing crisis: there is a desperate demand for more places to live.
So much so that successive governments have started to recognise the role of the private rented sector in providing these homes, and even make things easier for landlords to create them.
Alok Sharma, the current Housing Minister, recently commented that “as part of our plan to fix the broken housing market we’ve been taking action to create a bigger and better private rental market.”
Alongside this there is a massive surplus of void office and commercial spaces.
These offer a compelling solution for property investors. They are well-located, near the centre of towns and cities, and can be converted into an attractive number of apartments to rent or sell.
What’s more, they promise great returns.
Prices on converting office space from the saturated commercial market tend to be significantly lower than the cost of investing in a new-build.
It all looks very promising indeed.
But here are the ways that you can ensure your investment will deliver on its promise.
Don’t play the waiting game
There are fewer and fewer delays caused by planning laws these days.
And that’s music to a developer’s ears: a large investment needs to start earning its keep quickly.
However, you should be aware that:
- Whilst new legislation makes it easier to convert commercial buildings into homes, this only applies to the inside of the property.Commercial properties in market towns may need to maintain a look in keeping with their surroundings.
- Some local authorities also can make you play the waiting game.They will only consider changing a commercial property into a residential one if it can be proved that there is no market for it in its current state. This can mean waiting for up to a year to see if the property will sell or rent.
But, the biggest risk to your investment can be easily managed by yourself.
You need to ensure that your development is achieved quickly, finished to meet market expectations and remains on budget.
And when you’ve done this you need to get those apartments rented and offering you the returns you forecast.
And that’s what we are going to look at next.
Do your research
When you know and understand your market inside-out, your apartments effectively sell themselves.
- What kind of apartments are people in the area looking for?
- Are they likely to be families, young single commuters, or retired couples?
- What are they likely to expect and with what level of finish?
- Are people looking for small studio apartments or one-bed apartments. Maybe something larger?
If you do not create the apartments that people want, offer it at the price they expect and provide the finish they desire you may find yourself staring into a void. Literally.
And a little research can avoid this.
Your research should go beyond the apartments themselves, however.
It should take in the surrounding area of the building you are considering converting. While there can be many benefits to being situated in an area that is traditionally commercial, such as being close to the shops and travel networks, there can be some drawbacks too.
- Consider how easy it is to reach the property by car.
- Look into what parking options are available.
- If there are no decent schools nearby you can scratch that family market off your list.
- If there is a lot of noise from pubs, clubs, bars or takeaway shops you may simply wish to invest in quality soundproofing – many people love to live close to amenities.
Being in the thick of it can be a selling point – but make sure your surrounding area matches your potential market.
Make use of that space
Careful planning can provide extra apartments – without compromising on the living space each offers.
The more apartments you have in your property…
We think you get the picture!
Leave room for the essentials
Make sure you have provided for everything that your tenants or residents will need.
It’s not just about the space in the apartments themselves for things like kitchen storage, a place to tuck the hoover or hang the coats.
It’s also about easy access to bin storage outside and a cycle store (which is absolutely essential for most city centre apartments).
Think outside the box
It’s all too easy to spend so long designing the perfect interiors that you forget about how the building itself looks from the outside.
After all, what’s the first impression a prospective renter or buyer will have of their new home?
It needn’t cost the earth to redecorate the external façade, but it can make all the difference. And it’s amazing how new windows can bring your profit prospects into a sunnier view.
Variety is the spice of life
There are two very quick wins here.
The first is a simple fact.
Everyone is different. We have different tastes and look for different things. If all your apartments are styled and designed in the same way you diminish your chances of pressing people’s buttons.
Vary the styling: use different colours on walls and tiles in kitchens, fit different floor finishes and make each apartment feel unique.
The second is an impression.
As people are shown around they are likely to look at a few different apartments. What message does it send if everything looks the same?
At best, it suggests that these apartments are almost factory-assembled rather than lovingly crafted.
And, at worst, it gives the impression that they have been developed on the cheap – and who know what other corners have been cut?
Looking to invest?
If you are looking for a principal contractor for an office to apartment conversion – and need someone who can add value as well as deliver the perfect finish – we’d love to talk.
Give us a call on 01483 756575
or send us a mail at firstname.lastname@example.org.