FANCY living in the former London headquarters of a national newspaper, or returning home to the brutalist architecture of Erno Goldfinger after a hard day at the office?
The previous City Road offices of The Independent newspaper in Moorgate are being converted into about 90 apartments, while the former Department of Health and Social Security headquarters at Alexander Fleming House, at the Elephant and Castle, represents one of the capital's biggest office conversions. The 300,000-square-foot building designed by Goldfinger in the 1960s is to be transformed into more than 400 apartments, with prices expected to range from £40,000 sterling for a studio flat to more than £200,000 for a penthouse suite.
Developers and landlords faced with millions of square feet of unwanted city centre office space are increasingly turning to residential conversion. Ian Lerner, the residential agents, estimates that more than three million square feet of redundant offices on the fringes of the City of London - an area covering the size of almost 70 soccer pitches - have been sold for conversion.
Over-development in the 1980s and changing patterns of demand from financial institutions, which now want large, open-plan floors, mean that many buildings are unlikely to attract commercial occupiers again. They will either remain empty or have alternative uses found for them, says Ian Lerner.
This pattern is not restricted to London. Matthew Ryall, economist at the Royal Institution of Chartered Surveyors (RICS), says a small but growing number of conversions is taking place in provincial cities. "The local authority in Birmingham has been particularly active in trying to find alternative uses for redundant office space. The council recently helped a housing association finance the conversion of 2-12 Corporation Street into social housing," says Mr Ryall. Manhattan Loft Corporation has also been involved in conversions in Manchester, he says.
An oversupply of Georgian townhouse offices in Edinburgh in the early 1990s has largely been absorbed, as many of the properties have been reconverted to residential use.
The biggest demand for office conversions remains in central London, however, where the RICS estimates there is at least 10 million square feet of commercial space unlikely to return to its original use.
Owners contemplating changing to residential status will have been encouraged by recent sharp rises in house prices up by more than 10 per cent across central London last year.
The prospect of a growing shortage of homes in the capital can only add to the potential attraction of this market, says the institution. London Property Research, the consultancy, estimated at the end of last year the 11 central London boroughs would need an extra 153,000 homes by 2006 - yet only 10,000 homes a year are being built.
The consultancy said conversion of offices and land earmarked for offices could provide 60,000 homes in London in the next 10 years. Demand was being fuelled by "London's increasing role as a world city, the rising rate of household formation and the lifestyle appeal of inner city living".
Reducing commuting time by living close to the city centre is particularly attractive to the young and affluent, says Mr Ryall of RICS. Office conversions, provided they are centrally located and of sufficient quality, are likely to appeal to late-working executives "too tired to trek out to the suburbs every night", or to young couples with "double income no kids yet", he says. Overseas purchasers, particularly from Hong Kong, Singapore and more recently from Russia, have also been attracted to buy converted apartments in central London.
"Developers saw the success of cities such as New York and Toronto in turning redundant office space into apartments and have been trying to repeat the formula here," says Mr Ryall.
He estimates only 1,000 apartments were produced from converted office space in central London between 1992 and 1995, but this doubled last year as a number of new schemes came on stream. "We would expect another 5,000 to 7,000 converted apartments to be available by the year 2000," he says.
Alexander Fleming House, which is being redeveloped by Imry, the property group in the process of being sold by Barclays Bank, and St George, part of Berkeley Homes, is one of several large deals announced in the past 18 months.
Part of the Shell Centre, next to County Hall on the south bank of the Thames, has been sold for £20 million and is being redeveloped as flats.
Mr David Goldstone, chairman of Regalian, a property company that cut its teeth on office conversions in the 1980s and remains one of the biggest operators in the market, says: "Not every office block is suitable for conversion. Buildings which are too deep and have little natural light in their interior are unattractive to homeowners. One solution is to drive an atrium through the centre to create more natural light and windows, but this is expensive, and must be taken into consideration when looking at what price you can get for an apartment."
Location is important in terms of communications and views. Local authorities may also be concerned about lack of parking.
One of Regalian's most successful developments has been Peninsular Heights, a converted office block on the south bank of the Thames opposite the Tate Gallery, with spectacular views of the river. Occupants include Lord Archer, the author.
Regalian raised £16.8 million from a rights issue at the end of last year to take advantage of the strengthening market for London homes. It recently paid £12.5 million for Baynards House, a former Bayswater department store and more recently used as government offices, which it hopes to convert into 180 flats.
"Our view is that there is a good market for conversions, but that the building and location must be right if it is going to work," says Mr Goldstone.
