The City of London has long been defined by office towers, banking headquarters and a working week that revolved around finance. But as hybrid working continues to reshape office demand patterns and sustainability pressures intensify, the Square Mile is increasingly seeing hotels, student housing, serviced apartments, cultural venues and mixed-use schemes encouraged to fill the gaps left by obsolete office stock.
The shift is significant and is part of a deliberate planning policy shift from The City of London Corporation under the City Plan 2040 to encourage more mixed-use developments, particularly hotel and hospitality projects, in recognition that some older Grade B offices were no longer viable as workplaces or for refurbishment.
The result has been a growing pipeline of conversions that could ultimately provide a blueprint for other global CBDs and in 2025 major planning applications for residential and hotel schemes accounted for around 23% of all applications in the City, up from just 8% in 2021, according to the City of London Corporation’s data. Retrofits across all asset classes also exceeded 50%.
The City has historically lacked hotel supply relative to its daytime population, particularly at weekends when many areas traditionally shut down. The City’s hotel stock is currently at around 4,800 rooms, with 1,000 more in the planning pipeline, and City of London Corporation Planning and Transportation Committee Chair Tom Sleigh expects that to rise by 350 rooms a year between 2030 and 2040 as conversions accelerate.
The policy change is also tied to a wider ambition to create a seven-day district and this reflects a broader reassessment of what makes CBDs viable, with a number of major schemes have been approved in the past 12 months. Last year the City approved planning permission to expand and refurbish the Montcalm Hotel at the Whitbread Brewery, Chiswell Street. The refurbishment will provide a new and improved bar, a restaurant, lounge and events space on the ground floor, plus eight additional bedrooms, from 213 to 221, with completion due early 2028.
“Delivering more, high quality hotel rooms is a vital component of the ‘Destination City Growth Strategy’. Hotels across the Square Mile currently enjoy a healthy occupancy rate of around 80% as rising tourism and business visitor numbers increase demand for this type of accommodation,” Sleigh added.
Whitbread leads repurposing
Among the most active players has been Whitbread, whose Premier Inn brand has aggressively pursued office conversions across London. The group acquired New London House at 6 London Street from clients of Orchard Street Investment Management for £56.5 million, with plans put forward to transform the 8,360 sq m office, retail and restaurant complex into a hotel-led mixed-use development adjacent to Fenchurch Street station.
Whitbread has six sites in the City and has also delivered office-to-hotel conversions under both the Premier Inn and Hub by Premier Inn brands at Farringdon and Moorgate.
“We are seeing a structural shift in the London office market presenting opportunities to acquire office buildings that are no longer fit for occupier and investor purposes and to reposition and refurbish them,” Whitbread Managing Director for Property and International Mark Anderson said.
Other investors are following suit. LaSalle Investment Management brought the 6,970 sq m, 29 Clements Lane to market through Savills for around £30 million, specifically pitching the office building as a hotel conversion opportunity. In March Savills secured permission for the change of use for buyer Queensway for a new 235-bed Point A hotel.
The scheme will also activate the ground floor through a café/co-working space, a bar and lounge area, reinstating a food and beverage use in the historic location of the Red Lion Pub.
City attracts luxury operators
At the upscale end of the market, one of the City’s highest-profile conversion projects opened in 2024 with the launch of the 111-room Hyde London City at 15 Old Bailey. Developed by OB Capital and private equity firm Boscalt Hospitality following a £34 million transformation, the building had originally operated as a hotel before becoming offices.
And in the autumn, The City approved plans to restore and convert the Grade 1 Listed Custom House building on Lower Thames Street, into a new 179-room hotel. Formerly an office used by His Majesty's Revenue and Customs, the Custom House is adjacent to Sugar Quay to the east and Old Billingsgate Market to the west. The new hotel will feature a spa, health centre and a range of food and beverage uses, opening up the historic building to the public for the first time.
Developer Dominus is another major player capitalising on the trend. The company opened a 234-room The Derby, London City, Curio Collection by Hilton hotel at 5-10 Great Tower Street, converting a former office building into a hospitality scheme designed by Studio Moren.
“On walking into Great Tower Street, it didn’t feel like an office. It felt like a hotel, so it seemed ripe for conversion,” Dominus Real Estate Planning Director Ian Fergusson recalled. “We acquired it in the summer of 2023, and we went to the planning process very quickly. We tend to work with Marriott and Hilton, so typically the conversions are aimed at that level.”
Dominus and Cheyne Capital also gained planning permission this January to transform Ibex House into a 382-key, full-service hotel. The Grade II-listed, Art Deco building at 42–47 The Minories will see the vacant offices repositioned as a hotel designed by Studio Moren.
More than 4,600 sq m of public areas are planned, alongside a large conference centre with ballroom and meeting spaces, a new café and the restoration and reopening of the historic Peacock pub at ground level. The hotel is scheduled to open in late 2028.
Fergusson cautioned, however, that not every building lends itself to adaptive reuse: “The key thing is to establish if the block lends well to conversion and to be sure it’s in the right location for its new use, which is very specific to the audience you are targeting.”
It is not a challenge unique to London. Across Europe and the US, many financial districts are wrestling with rising office vacancy rates, tightening ESG regulations and reduced occupier demand for secondary workspace. Yet relatively few CBDs have moved as decisively as the City of London in creating a planning framework that actively supports large-scale adaptive reuse.