Team Conversion

Post-conversion valuation: turning your office asset into rental performance

High vacancy, regulatory requirements on commercial energy consumption: what changes your value equation

A rental uplift of 12 to 22% cannot be decreed, it is programmed before the first shovel hits the ground: 70% of post-conversion value is determined during the audit-programming phase, not on site. The post-conversion valuation of a commercial asset transforms capex into measurable rental uplift, provided the usual sequence is reversed. Kytom, founded in 2006, brings together heritage audit, target programming, BREEAM, HQE or WELL certified fit-out, and marketing dossier. Delivered operations aim to increase the rent and the disposal value of the asset, with an accelerated re-letting driven by a commercial dossier ready upon delivery. This page details the 5-step method over 12 weeks, the expected benefits and the conditions under which the approach is not relevant for an asset manager.

For the asset manager, conversion is no longer a capex/opex trade-off: it is a question of asset value at the next due diligence. The commercial buildings decree mandates -40% energy consumption by 2030, tracked via the OPERAT platform managed by ADEME (Decree no. 2019-771, articles R174-22 to R174-32 of the French Construction and Housing Code). ADEME estimates that a majority share of the French commercial building stock requires deep renovation before 2034 (ADEME, Plan de transition sectoriel bâtiment tertiaire, 2023). For the asset lead, the stakes are measured along three axes directly translated into cash flow and exit value:

Headline rent (revenue): within the Kytom portfolio, an asset certified BREEAM Very Good or WELL Silver re-lets at 12 to 18% more per sqm than an equivalent unlabelled property.
Occupancy rate (vacancy avoided): the average re-letting time after Kytom delivery stands at 4 months (Kytom portfolio median 2022-2024), compared with a market benchmark of 9 months in the same areas (internal consolidation based on broker notes from CBRE and JLL, 2023-2024). For an 850 sqm asset, each month of vacancy avoided represents between 25,000 EUR and 45,000 EUR in rental revenue depending on the area (Kytom calculation based on 2024 broker grids).
Metric value at resale (exit): the triptych of HQE Exploitation (Certivea), BREEAM In-Use (BRE) and WELL Building Standard (IWBI) covers environment, operation and well-being, ESG criteria explicitly cited in the investment grids of the institutional funds met by Kytom in 2023-2024.

Our reading differs from the industry consensus on one precise point. The Ile-de-France market shows an office vacancy rate above 9% in 2024 (broker market note Q1 2024, aggregation of CBRE/JLL/BNP Paribas Real Estate), and many asset managers conclude that every obsolete asset must be converted. Across 78 delivered operations, Kytom observes the opposite: it is not average vacancy that justifies the trade-off, it is the rent gap between certified and non-certified assets on the same street. Without this gap documented beforehand with local brokers, conversion produces an uplift below 8% and destroys IRR.

What rental uplift can be expected after a post-conversion valuation?

The uplift depends on the original quality of the asset and its location: it is measured by comparing the rent achievable after works with the market rents observed in the area with your local brokers. The rent gap between certified and non-certified assets in the same area must justify the conversion before committing a single euro of capex.