Private equity firms are increasing their exposure to London office refurbishments, with PE-backed buyers accounting for around 13% of office acquisitions in the UK capital last year, up from just 4% in 2022, according to a report by Bloomberg.
Investors are targeting older buildings that can be upgraded to meet tightening energy efficiency standards and attract tenants willing to pay higher rents for greener, amenity-led space.
Groups active in the strategy include Brookfield Asset Management, Blackstone and Hines, which are backing extensive retrofit programmes rather than ground-up developments. Typical upgrades include removing all-glass facades, introducing terraces and gyms, electrifying heating and cooling systems, and adapting buildings to hotter summers and heavier rainfall linked to climate change.
The approach is coming as landlords are looking to offload assets that risk becoming obsolete ahead of stricter UK energy regulations due to take effect in the early 2030s. Cushman & Wakefield estimates that more than three-quarters of London’s office stock could be at risk of obsolescence due to new energy efficiency regulations.
