Retrofit Beyond London: The Regional Viability Challenge

14 May 26

In many regional markets, there are clear examples of market failure, where private capital alone cannot unlock wider societal benefits, and so requires public sector support to unlock delivery. Strong evidence-led business cases are therefore critical.

Retrofit and repurposing are now firmly part of the future of UK cities, but the opportunities and challenges look very different outside London.

At Iceni, we have advised on over 700 individual retrofit and repurposing projects, helping clients respond to changing market demand, sustainability objectives and shifting occupier expectations. In many cases, retrofit can provide a commercially and environmentally compelling alternative to demolition and new build.

The office market has seen a well-documented “flight to quality”. Demand is concentrated around high-performing, well-connected workspaces, and often this means new development. In London, the depth of demand, rental growth and capital values mean that the retrofit and repositioning of older buildings can remain highly viable in the right locations. Our recent work at Sackville House (Piccadilly), Flitcroft House (Camden) and 99 Charterhouse Street (Farringdon) reflects this.

That said, even in London, retrofit does not always lead to renewed office space. In many areas, residential values continue to outcompete commercial values, driving office-to-residential conversions instead.

Importantly, not every occupier is seeking shiny, brand-new space. Many businesses within the creative, digital, media, technology and consultancy sectors – and increasingly parts of the professional services market – actively seek characterful, historic buildings. These spaces provide authenticity, identity and a differentiator for both brand and culture.

The challenge becomes far more pronounced outside London. Across many regional cities and towns, retrofit and repurposing projects face significantly tougher viability conditions. Capital values and rental growth are lower, but construction and refurbishment costs are often not materially lower than those in stronger markets. The result is a much sharper viability gap.

The scale of the challenge becomes clear when comparing Grade A office rents across UK cities. Office rents for high-quality stock in London’s city core office market currently exceed £70 per square foot, while many regional core city markets continue to operate at below half of that level.

This helps explain why many regional office markets are seeing very limited delivery of net additional space.

Occupier behaviour also continues to evolve. Flexible working patterns and prolonged economic uncertainty mean many businesses are delaying major relocation decisions and remaining highly price sensitive. Following years of inflationary pressure, rising employment costs and broader economic disruption, that caution is understandable.

At the same time, investment conditions remain challenging. While rents may continue to grow in some markets, yield movement means capital must work harder to generate returns, making investment increasingly difficult. This is why targeted intervention and gap funding are becoming increasingly important.

What is often less clearly articulated in discussions around retrofit is the wider economic, environmental and societal value these projects create. Retrofit is not simply about preserving buildings for the sake of it. It is about maximising the productive use of land and assets, retaining embodied carbon, protecting cultural heritage and supporting healthier, more resilient places.

The principles underpinning HM Treasury’s Green Book strongly align with this agenda: making best use of existing resources, valuing environmental outcomes and recognising wider social and economic benefits.

Projects that attract high-value sectors, such as digital, technology and creative industries, can generate substantial productivity, employment and GVA impacts. Others can unlock major cultural and wellbeing benefits through the reuse of historic assets. New research by Historic England can support us in quantifying and monetising the wider societal benefits of repurposing older buildings.

There are many interesting examples in our regional cities. In the midlands, the Custard Factory in Digbeth has been repurposed and helped catalyse the wider renaissance of the area as a hub for creative and commercial activity. Also in Digbeth, the Typhoo Building is currently being redeveloped as the BBC’s new Headquarters, strengthening Birmingham’s creative economy. Meanwhile, in Smethwick, schemes like Chances Glassworks requires further public sector support but could be transformed into a creative, cultural and community destination in the heart of the Black Country.

Supporting retrofit and repurposing in our regional cities could have major economic and societal benefits, but is likely to require targeted public sector support. Robust, evidence-led business cases can help to articulate the case, and unlock funding support.

Done well, retrofit can support economic growth, strengthen city centre competitiveness and deliver long-term environmental and social value. We look forward to continuing these conversations at the BCO Conference and UKREiiF.

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Retrofit Beyond London: The Regional Viability Challenge

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