Why office buildings in Leeds could end up being turned into apartments

Nearly one fifth of UK landlords (18 per cent) still have commercial properties with an energy performance certificate (EPC) rating of F or G, according to research by RSM UK.

New legislation, coming into force in 2027, states that commercial let properties must have a minimum EPC rating of C or above.

"The vast majority of buildings, when you look across the skyline, are what we call grade B stock that will need refurbishing,” said Mr McWilliams.

"What do you do with them? Are they all going to stay as offices or are they going to start to be repositioned as residential?”

He added: "The amount you have to spend to get a building to a level where you could justify the rent increase is a real challenge and that repositioning is costing more than it would do normally.

"At the moment, whilst a number of occupiers are focused on the greenest buildings, it’s often the major blue chip corporates, not the SMEs who occupy the vast majority of the market.

“You probably haven’t got the depth of demand yet from businesses to occupy that finished product.

"I think that will start to change as more businesses look towards the 2030 deadline that many of them have set to hit their own environmental targets.”

Mr McWilliams was speaking ahead of a major real estate conference, which is coming to Leeds next week.

UKREiiF (The UK’s Real Estate Investment and Infrastructure Forum), organised by Built Environment Networking, will welcome thousands of domestic and international developers, investors, councils and built environment thought leaders to the city.

The event, now in its second year, aims to attract inward investment, generate economic growth, and drive a more sustainable and inclusive culture within the property and construction industries.

Earlier this week, Michael Grace, director and Leeds strategic lead at Turner & Townsend, said a priority at UKREiiF was to show that Yorkshire is in a place to support the UK’s net zero and sustainability ambitions. “We are already seeing promising commitments and investment from local authorities across the country to retrofit existing buildings with low carbon energy systems and improve insulation and ventilation,” he said.

"In the North East, we’re working with the Tees Valley Combined authority to support local councils establishing heat decarbonisation plans for their residential and public buildings. We need that trend to continue and for more authorities to come to the table.”

JLL is sponsoring the Future of Real Estate pavilion, which will have a major focus on regeneration and the collaboration between the public and private sectors.

"A forum like UKREiiF is ideal to bring those parties together,” said Mr McWilliams.