Once a pillar of British commercial real estate, the traditional office market has been fundamentally reshaped by the rise of remote working, changing tenant demands, and new planning rules. In 2025, flexible workspaces—not long leases—are leading the way.
But does this mean the end of the office? Far from it.
Investors are rethinking their approach to commercial property. With the right location, format, and planning permissions, offices are becoming more versatile—and profitable—than ever.
Where is the UK office market heading in 2025?
Post-pandemic, many employers shifted to hybrid or fully remote models. As a result:
- Long leases (10+ years) are becoming rare
- Vacancy rates have risen in outdated city centre blocks
- Landlords are offering more amenities and shorter terms
- Demand for flexible, managed, and serviced space is rising fast
According to BNP Paribas Real Estate, 30% of UK office take-up in 2024 was in flex workspace—a trend continuing in 2025.
Why investors are backing flexible workspace
Resilient demand from SMEs and startups
Small businesses want agility, not fixed leases. Flex spaces let them scale up or down fast.
Higher yields per sq ft
Although voids are more common, rents in serviced offices can command 20–40% premiums over standard leases.
Lower capex than residential conversion
Upgrading for flex use (WiFi, breakouts, access control) is cheaper than full residential planning and build-out.
Institutional interest is rising
LandSec, British Land, and major REITs are backing new flex space models—and buying out co-working operators.
Commercial property shows stronger resilience as mortgage rates strain residential sector
Office-to-resi conversions: the other big trend
While flex workspace is hot, office-to-residential conversions continue to attract developers and councils alike—especially in town centres and commuter belts.
What’s fuelling it:
- Permitted Development Rights (PDR) allow office-to-resi with limited planning friction
- Local authorities are pushing for housing stock
- Secondary office buildings are often cheaper to convert than build from scratch
2025 hotspots for office-to-resi:
- Watford
- Reading
- Milton Keynes
- Slough
Why developers are snapping up billions in unwanted office buildings
What investors should look for in office assets
| Factor | Tip |
| Location | Prioritise transit links, town centres, and digital clusters |
| Floorplate layout | Open-plan is easier to divide and adapt for flex space |
| Planning flexibility | Check local support for conversion or mixed-use schemes |
| ESG credentials | Tenants demand EPC B+ and green features |
| Management partner quality | Serviced offices require excellent operators and tech platforms |
Landsec plots £2bn office sell-off in pivot to residential market
Final takeaway: the office isn’t dead—just reinvented
In 2025, commercial offices are no longer static spaces on 25-year leases. They’re flexible, hybrid-ready, and highly curated environments. Investors who understand this shift—and respond to occupier trends—can still find strong returns in the evolving landscape.
The key is adaptability.
