Why invest in a warehouse conversion in London?
The attraction of owning a slice of Bermondsey or Borough history with the contemporary appeal of an airy open plan interior makes these character properties tempting.
Read on to find out where to find a converted warehouse in SE1 – and the advantages and disadvantages of investing in one.
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With London’s long industrial history, many warehouses were built in the 1800s. After the London Docks closed in 1969, many of the industrial buildings were no longer in use. Property developers identified an opportunity to repurpose the buildings into apartments.
Many of these character apartment buildings are grouped along the banks of the Thames, where they were used to store goods shipped to the UK from around the globe.
The concept of converting warehouses came to prominence in the 1980s with the rise of loft living. As creatives moved in, investors and renters started to realise the potential of buildings that industry had left behind. Once known to locals as firmly functional parts of town, they took on a new lease of life.
The building’s story typically becomes part of the conversion, woven into its fabric in a way that celebrates old and new. Architects typically craft the conversions with contemporary appeal, highlighting period features with flashes of brickwork and metal beams.
In today’s landscape, warehouse conversions have become very popular with tenants who are looking for property offering larger space than is typical in central London areas. Warehouse conversions often provide twice the floor size and ceiling height of a typical London apartment.
Converted industrial properties have distinct architectural styles that reflect the history of the building and its former use. The historic character is hugely appealing for many tenants.
These buildings offer unique design features such as:
These unique features tend to command higher monthly rents, with high-earning professionals seeking exclusive properties with character, luxury amenities and river views.
Situated on the south bank of the Thames, SE1 is characterised by its Victorian industrial past. SE1 is one of the most recognised warehouse conversion markets in London, with a large concentration of converted riverside apartments.
You can find converted warehouses grouped around the Bermondsey neighbourhoods of Shad Thames and Tower Bridge.
There are many warehouse conversions around inlets where ships once docked, such as Butler’s Wharf and Tea Trade Wharf. Names like Tamarind Court, the Cardamom Building, and the Jam Factory all hint at the locality’s past life.
When weighing up your investment options, there are many different factors to consider, such as how much upfront costs you are willing to pay and the potential rental yields you can achieve.
Here is an overview of how converted warehouses compare to new-build apartments for key investment considerations:
| Factor | Converted Warehouse | New-Build Apartment |
|---|---|---|
| Purchase Price | Higher upfront | Varies by development |
| Rental Yield Potential | High | Moderate–High |
| Maintenance Costs | Higher | Lower |
| Energy Efficiency | Lower | Higher |
| Tenant Appeal | Very High | High |
| Resale Value | Strong | Good |
| Supply Scarcity | Very Limited | Ongoing Supply |
Listed building status – The main disadvantages of investing in warehouse conversions are their age and listed building status. To preserve their distinctive character, many converted warehouses in SE1 are Grade II listed. This can be an asset, but it makes improvements or changes more complex.
To make alterations to listed buildings, consent must be obtained through the local authority. Another disadvantage is that insurers often charge higher premiums to cover listed buildings, as refurbishing must be done while preserving the original character, which typically costs more through specialist tradespeople.
Poor energy efficiency – Tenants often choose these types of properties for their historical features, including larger windows, and the airy open plan layouts these properties are known for. But there can be disadvantages to living in a conversion, such as the cost of heating a larger space.
In 2026, rental properties must by law have a minimum EPC rating of E and there are government plans to upgrade this to C by 2030. This could mean paying retrofit costs to improve energy efficiency.
Maintenance costs – With historical buildings, making repairs and updates can be more expensive, especially if you need to source fittings that complement the character. You may also need to pay specialist tradespeople for improvements.
Leasehold considerations – Many converted warehouses are sold as leasehold, so you should check details of any lease, including lease length, ground rent terms and service charge history. Properties with shorter leases can reduce the value of a property and this also makes it more difficult to get a mortgage or to sell on in future.
It’s also worth considering who your potential renters will be, and finding a property in an area that will also appeal to them. Location is key.
| Advantages | Disadvantages |
|---|---|
| Central, well-connected location | Listed building status restricts alterations |
| Scarce, unique property type | Lower energy efficiency than new builds |
| Mixed-use potential for retail or office space | Higher maintenance and repair costs |
| Strong rental yield potential | Higher insurance premiums |
| Strong capital appreciation history | Leasehold terms need careful checking |
| Desirable, low-risk tenant profile |
Warehouse conversions in London typically have EPC ratings of D or E because features such as large windows, higher ceilings and older construction do not provide the level of energy efficiency as new properties. Heating costs are often higher, with these older properties more prone to air leakage around windows and through the roof.
To improve the energy efficiency in converted warehouse properties, investors can install secondary glazing and smart controls. Some properties will be suitable for installing insulation to help meet EPC minimum requirements both now, and in future if the rating requirement is upgraded.
Typical tenants looking for warehouse conversions are City professionals working in sectors such as tech, finance and creative industries who are willing to, and can afford to, pay above-market rents.
Potential warehouse renters are looking for a desirable location with that gold-dust combination of relatively spacious interiors, a unique building with its own history, and a buzzing location. They are also people who are drawn to the slightly unconventional or unique.
Warehouse renters know the potential of these iconic London living spaces. Consider all the usual desirable traits, like a well-designed open plan layout that maximises natural light through large windows. They may also value the single storey living offered by many converted industrial buildings in London.
Before you invest in a converted warehouse property you should work out the costs and potential return. There is always the chance that something won’t go to plan, but this is some information you will need to estimate the return on a converted industrial property.
Research the sale price and monthly rent on similar properties. Investing in any property incurs costs above the sale price, such as legal fees and stamp duty. Which? has created a stamp duty calculator to work out the percentage of stamp duty you need to pay for a buy-to-let property. Be aware that if you are an overseas buyer, you may be liable for a surcharge.
When buying a loft conversion as a buy-to-let, you will also have to allow for costs such as maintenance and gas and electrical checks. Once tenants have moved in and are paying monthly rent, you will need to deduct tax and any regular charges or monthly fees from your return.
Investors can no longer deduct the full mortgage interest from tax calculations, but can claim 20% tax credit on mortgage interest. In our landlord’s guide to paying tax on rental income, you can provisionally work out your tax on rental income.
To calculate the projected gross yield on a warehouse conversion, you can use the following formula:
annual rental income ÷ purchase price × 100 = gross yield %
Based on a 2-bedroom warehouse conversion in SE1 priced at £800,000 and £4,000 pcm rent, the gross yield would be:
(£4,000 x12) ÷ £800,000 x 100 = 6%
To calculate the net yield, you should subtract the annual expenses from the annual rental income, for example:
Service charge £2,000
Buildings insurance £600
Maintenance £1,000
Letting agent fees £2,000
Ground rent £100
Total = £5,700
So, the net yield factoring these costs would be:
(£48,000 – £5,700) ÷ £800,000 x 100 = 5.29%
When working out potential returns on a property investment, you should always use the net yield to get the realistic return figures you are likely to achieve.
Listed building consent applications usually take 8 to 12 weeks to be decided by the local authority, though more complex alterations can take longer. Investors should factor this timeline into any renovation plans before exchanging contracts, particularly if a refurbishment is needed before the property can be let.
Some lenders are more cautious with listed or converted buildings, especially those with non-standard construction or short leases remaining. A specialist broker familiar with period conversions can widen the pool of available lenders and help avoid delays during the application process.
This depends on planning permission, the building’s listed status and any restrictions in the lease. Many SE1 warehouse conversions are Grade II listed, meaning changes of use often require both planning consent and listed building consent, so this should be checked with the local authority before purchase.
Secondary glazing, loft or floor insulation and smart heating controls are among the more achievable upgrades for listed warehouse conversions, since visible double glazing or external insulation is often restricted. A retrofit assessment before purchase helps identify which improvements a specific building can accommodate.
Service charges in warehouse conversions are often higher due to the cost of maintaining period features, communal areas and specialist repairs. Buyers should request the service charge history and any planned major works before purchase, as costs can vary significantly between buildings.
Limited supply and consistent demand from high-earning tenants have historically supported stronger value retention for warehouse conversions compared with the wider market. This isn’t guaranteed for every building, and factors like lease length and location still affect resale value during a downturn.
Rental values depend on the building’s location, condition and specific features such as ceiling height or river views. A local valuation gives the most accurate figure based on current demand from City professionals in areas like Shad Thames and Tower Bridge.
Every warehouse conversion offers something different. As with any investment, you must take each property on its own merits. Expertise in the market can help you locate the right property in prime areas such as Wapping and London Bridge.
If you are looking to invest in this type of historical property, contact our team. Garrett Whitelock can offer experience and local knowledge on the range of properties on offer in SE1.
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