Investing in Offices: Still Relevant, Slightly Risky, and Surprisingly Full of Accountants
- Josh
- Aug 29, 2025
- 5 min read
Investing in office buildings: the phrase alone conjures images of glass towers, revolving doors, and someone in a suit shouting “synergy” into a Bluetooth headset. But beneath the corporate gloss lies a complex, often misunderstood asset class—one that can be lucrative, risky, and occasionally involve explaining to your lender why the tenant is a tech startup with no revenue but a very nice coffee machine.
Whether you’re considering your first office investment or adding another to your portfolio, this guide will walk you through the essentials—without the jargon, and with only mild sarcasm.
Why Office Buildings?
Office buildings are the backbone of the business world. They house everything from law firms and accountants to digital agencies and recruitment consultants who say things like “we’re disrupting the hiring space.”
For investors, they offer:
Stable, long-term leases
Attractive yields
Capital growth potential
A chance to say “I own that building” while pointing at something glassy
But they also come with complexity, regulation, and the occasional existential crisis when your tenant decides to go fully remote.
Types of Office Investments
Before you start browsing listings, it’s worth understanding the different flavours of office property:
1. Single-Tenant Buildings
One tenant, one lease, one headache if they leave. These can be stable if the tenant is strong (think law firm, not crypto startup), but risky if they’re not.
2. Multi-Tenant Buildings
More tenants mean more income streams—and more leases to manage. These are common in city centres and business parks.
3. Serviced Offices
Think WeWork, but hopefully profitable. These offer flexible space, short-term lets, and high turnover. Great for cash flow, less great for long-term stability.
4. Mixed-Use Buildings
Office space combined with retail or residential. These can be attractive to councils and investors alike, but financing and management are more complex (see: spreadsheets, therapy).
Location, Location, Lunchtime Options
Office buildings live and die by their location. Tenants want:
Good transport links
Nearby amenities (coffee, lunch, after-work drinks)
A postcode that doesn’t scream “industrial estate”
Central business districts (CBDs) tend to command higher rents and attract better tenants. But they also come with higher prices and more competition. Secondary locations can offer better yields—but also more risk.
Understanding the Tenant Market
Before you invest, ask: who’s going to rent this space?
Corporate Tenants: Reliable, long leases, but increasingly remote.
SMEs: Flexible, growing, but more volatile.
Startups: Energetic, innovative, and occasionally allergic to profitability.
Check vacancy rates in the area. Speak to local agents. And remember: a building without tenants is just a very expensive box.
Lease Structures: The Joy of Legalese
Office leases are longer and more complex than residential ones. Expect:
5–15 year terms
Rent reviews every 3–5 years
Break clauses
Full repairing and insuring (FRI) leases—where the tenant pays for everything, including the roof they didn’t ask for
Long leases with strong covenants (i.e. tenants who pay rent and don’t vanish) are gold. Short leases or vacant buildings? More speculative, more risky, and more likely to involve awkward conversations with your lender.
Financing Your Office Investment
Now for the bit that involves banks, brokers, and the occasional existential sigh.
1. Commercial Mortgage
The standard route. Lenders will look at:
The property’s value
The lease terms (long the better)
The tenant’s covenant strength
Your experience and financials
Expect:
Loan-to-value (LTV) of 65–75%
Interest rates from 6–8% (depending on risk)
Terms of 5–25 years
2. Bridging Finance
Useful for vacant buildings or quick purchases. Higher rates, shorter terms, and a strong exit strategy required (e.g. refinance, sell, or cry softly into your spreadsheet).
3. Development Finance
If you’re refurbishing or converting, development finance may be more suitable. Lenders will want detailed plans, costings, and a clear endgame.
4. Private Investors / JV Funding
If you’ve got the expertise but not the cash, consider partnering. Just make sure the agreement is clear, legal, and doesn’t end in passive-aggressive WhatsApp messages.
Need expert commercial mortgage advice?
Due Diligence: The Bit You Can’t Skip
Before you buy, do your homework. And not the kind you can copy off someone else.
1. Valuation
Get a proper valuation. Not just a guess based on “vibes.” Lenders will insist on it, and it’ll help you avoid overpaying.
2. Legal Review
Office leases can be dense. Get a solicitor to review:
Lease terms
Break clauses
Service charge provisions
Planning permissions
3. Building Survey
Check for structural issues, asbestos, dodgy wiring, or anything that might cost you a fortune later. If the roof looks “quirky,” assume it’s expensive.
4. Tenant Checks
If the building is let, review the tenants:
Are they paying rent?
Are they solvent?
Are they likely to renew?
If the answer to all three is “maybe,” proceed with caution.
Management: More Than Just Collecting Rent
Owning an office building isn’t passive. You’ll need to:
Manage leases
Handle maintenance
Deal with service charges
Respond to tenant queries (e.g. “Why is the lift making that noise?”)
You can outsource this to a managing agent, but they’ll charge a fee—and you’ll still need to oversee them.
Tax and Legal Considerations
Because HMRC never sleeps.
1. Stamp Duty Land Tax (SDLT)
Commercial rates apply. No 3% surcharge, but still painful.
2. VAT
Some office buildings are VAT-registered. You may need to “opt to tax” the property. Speak to an accountant before doing anything rash.
3. Capital Allowances
You may be able to claim allowances on fixtures and fittings. Again, accountant required.
4. Business Rates
Tenants usually pay these, but if the building is vacant, you might be liable. And they’re not cheap.
Risks to Watch Out For
Office investment isn’t all long lunches and rent cheques. Here’s what can go wrong:
1. Vacancy
If your tenant leaves, you’re stuck with an empty building and a mortgage payment. Always factor in void periods.
2. Market Shifts
Remote working, economic downturns, and changing business needs can affect demand. Stay informed, stay flexible.
3. Refurbishment Costs
Office buildings age. Lifts break. Air con dies. Budget for ongoing maintenance—and then double it.
4. Financing Challenges
Lenders are cautious. If the building is vacant, underperforming, or has short leases, expect more scrutiny and less generous terms.
Exit Strategy: What’s the Plan?
Before you buy, think about how you’ll eventually sell or refinance.
Hold for income: Collect rent, enjoy yield, refinance as needed.
Sell to another investor: Ideally with strong leases and full occupancy.
Convert to residential: Subject to planning, and increasingly popular in areas with oversupply of office space.
Your exit strategy affects your financing, your management, and your stress levels. Choose wisely.
Final Thoughts: Is Office Investment Right for You?
Office buildings can be a rewarding investment. They offer:
Strong income potential
Long-term leases
Capital growth
A sense of corporate grandeur
But they also require:
Careful due diligence
Active management
A tolerance for complexity
A good broker, solicitor, and possibly a therapist
If you enjoy spreadsheets, lease negotiations, and the occasional tenant who insists on installing a ping-pong table, office investment might be your next move.
If not, maybe stick to flats.
Need expert commercial mortgage advice?
