The commercial property market is undergoing a prolonged adjustment. Rising construction costs, tighter regulations, and questions over financial viability have slowed new build 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 Many of these assets are inefficient, outdated, and unable to meet evolving sustainability standards without substantial investment. Yet demand for hotels in several UK cities remains strong, creating a clear opportunity for office-to-hotel conversions.
Edinburgh and London illustrate this trend particularly well. According to Colliers’ 2026 UK Hotel Market Index, Edinburgh retained its top position, with occupancy around 84.6% and an average daily rate (ADR) of £165. London moved up from seventh to second, achieving 81.2% occupancy and the highest ADR in the UK at £194. These figures highlight the ongoing appeal of these markets 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 – often in less central locations – are left without natural occupiers. Without a new purpose, these buildings risk remaining empty and underused.
Converting offices into hotels, however, is far from straightforward. These structures were never designed for hospitality. Developers must tackles challenges such as reconfiguring layouts, upgrading utilities, and meeting regulations for an entirely different type of occupant. In cities like Edinburgh and London, heritage considerations add another layer of complexity, with listed features needing careful preservation and integration into modern designs.
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 before construction begins. Surveys and specialist input from engineers, heritage consultants, and environmental experts help establish a realistic brief. Consideration of energy performance objectives and how best to achieve these within the constraint of the building’s structural and physical limits is particularly important
By developing a clear brief at the outset, mapping constraints, and coordinating expertise, 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.
Edinburgh and London demonstrate a clear rationale for this approach. Hotel demand is strong and sustained, while older office stock continues to appear on the market . Similar dynamics are emerging in other UK cities, suggesting that this trend is likely to spread.
For developers and investors, the key challenge is balancing financial returns with the technical and regulatory hurdles these projects present. With careful preparation and management, office-to-hotel conversions can unlock long-term value, absorb surplus office space, and enhance a city’s hospitality offering.
