DEEP DIVE: The Next Phase of Real Estate Investing Isn’t Passive — It’s Operational

A new risk profile for the next investment cycle.

Hotel conversions are trending in London¹ — but this isn’t just a story about oversupply or rising tourism demand. Look closer, and a deeper shift comes into view: forward-thinking institutional investors aren’t just changing what buildings are used for — they’re changing how they create value.

Green Street News reported that more than 1 million sq ft has traded for hotel conversion since 2022.

Rather than investing in traditional rent-collecting real estate, some investors are gravitating toward Operational Real Estate (OpRE) — assets that generate income through active operations and multiple revenue lines. Hospitality may be the obvious example, but OpRE now spans sectors from flexible offices to co-living, self-storage, student housing, and beyond. What unites these models is their business-led approach to real estate, where the NOI is driven as much by service delivery and brand as by square footage.

This shift has major implications for the future of office buildings. As the line between real estate and operating businesses continues to blur, investors are asking:

can offices evolve into hospitality-led OpRE platforms — rather than being converted into entirely different uses?