Workers who moved out of London for remote work are under pressure to come back to the office in the city, and some are choosing to stay in Japanese-inspired sleeping pods for just £30 ($40).

I travelled to Piccadilly Circus in the heart of London to spend a night in a newly opened capsule hotel, after two of my colleagues who live outside the city recommended staying there.

Zedwell Capsule Hotel, a brand owned by Criterion Capital, opened in September and offers nearly 1,000 capsules measuring 1 meter long, 1 meter wide, and 2 meters in depth — likely the smallest hotel rooms in London.

It has a rather unassuming exterior despite being located inside the historic London Pavilion building — originally built as a music hall in 1885. The entrance is around the corner of the busy station, through some black doors.

The cost of staying in a hotel in Central London is staggering, sitting at an average of £265 per night in the third quarter of 2025, according to real estate firm Knight Frank. In comparison, the average daily rate of hotels across Europe was 125 euros in the summer, according to an analysis of over 600,000 reservations from 2,000 independent hotels by RoomRaccoon.

Criterion's Head of Hotels Halima Aziz told me that the capsule hotel addresses a gap in the market between budget hostels and affordable accommodation.

"We've formed this sweet spot between the two. We're not a budget hostel. We're not coming in at a £15 rate, giving you a bunk bed in a steel room," she said.

"When we decided to get into capsules, we really took inspiration from Asia, and the capsule concept was really born out of Japan as a response to very similar pressures we're facing in London."

In Japan, the first capsule hotel was built in the city of Osaka in 1979, primarily to serve as an inexpensive overnight option for salarymen who worked late and preferred to stay out drinking and socializing rather than spending more money commuting home.

It's given rise to some capsule-style hotels in New York, from sleeping pods by Kama Central Park, to Nap York, a sleeping station with private pods for short naps or overnight stays.

Now that the concept has come to London, I was keen to see for myself what the British version has to offer.

It's a Monday evening, and instead of my usual work-from-home routine, which involves preparing to go into the office the next day, I'm crawling into a brightly lit sleeping pod.

I roll down the garage-like shutters and lock it from the inside as I prepare to sleep. My head is just inches beneath the ceiling of my pod, which has a light dimmer, two clothing hooks, an air purifier, a wide mirror stretching along the head of the capsule, and charger sockets.

Although I can feel my luggage — a backpack and tote bag — at the end of my bed, and the bottom of my coat hung on the hooks, I'm surprised by how comfortable and cozy the bedding is.

I switch off the lights and noisy air purifier and find myself enveloped by pitch black and silence. It feels eerie, but with nothing to distract me, I fall asleep quickly.

Earlier in the day, I checked myself into the hotel using one of four kiosks, and as I roamed around the hotel, I noticed that the walls were painted black to match the exterior — and there isn't a single window in sight.

I rode up to the first floor and used a key card to access my female-only dormitory. My capsule was one of seven stacked side by side or on top of each other, and some were only accessible via steps.

I learned that despite the low initial cost, there was a series of additional amenities guests can pay for, from an extra £10 to be in a female-only dormitory, to £8 for a padlock, and £15 to store luggage securely.

The hotel had an unfinished feel. The entrance was covered in scaffolding and the faint sound of drilling could be heard from inside the building.

That's because it is "still under construction," Zedwell's General Manager Greg Walsh told me. The drilling sounds were coming from underground where a larger reception was being built, with direct links to Piccadilly Circus Station.

CEO Aziz confirmed that the building is not complete, adding that the additional cost for the female dorms was largely due to upgraded amenities, including a towel inside the pod and a female-only beauty room complete with hairdryers — although this is still under construction and not currently accessible.

"Ultimately, if you're not just targeting the traditional hostel market, and you want to widen access, you need to respond to people's needs, and people have needs for laundry, for beauty, that wouldn't typically be considered," she added.

While exploring the building, I found shared toilets and showers with classical music playing inside, as well as vending machines in the reception with snacks, drinks, slippers and eye masks amongst other items.

I wandered out for dinner and with Oxford Circus, Leicester Square, and Covent Garden within walking distance, it wasn't hard to entertain myself.

During my time in the hotel, I discovered I was one of many working professionals in the building. I spotted several guests arriving in suits and ties and carrying briefcases. One chef from Newcastle even told me he paid a total of £284 to stay in the hotel for a fortnight to work in London.

During the Covid-19 pandemic, many office workers in London moved out of the city, where it was cheaper to rent or own a home, due to remote and flexible working options becoming a normality.

A 2021 report from City Hall said it was likely that London's population fell during the pandemic. The number of payrolled London employees dropped sharply by about 210,000 by November 2020, with the report citing that flexible work arrangements made it easier to move out of the city.

The trend persisted, and by 2022, 43% of commuters lived over 30 minutes away from their workplace in the U.K., reflecting higher property prices in central areas, according to a report by commercial real estate firm CBRE which surveyed over 20,000 people globally.  

Additionally, CBRE found that 41% of people worldwide were planning to move to more remote locations in the next two years either in the same city or to a different city.

However, in 2025, there's been a sharp recall in remote work offerings with major companies enforcing return to office mandates in London from HSBC to JPMorgan, Amazon, Salesforce and John Lewis.

Zedwell's Aziz said one of the hotel's core demographics is young professionals and hybrid workers who are using Zedwell as a "base in the city" due to their flexible working patterns which require them to be in the office for a few days a week. Roughly 20% of the hotel's customers are corporate workers, Aziz said.

"The cost of commuting from Oxford, Cambridge, city centers that aren't accessible via the London Underground system, is quite high," she said. "Our product is often cheaper than their commute or late-night travel home."

The return-to-office mandate has left workers who don't live in cities scrambling to find inexpensive ways of staying in the city, without having to resort to unattractive options like hostels.

"Where they wouldn't traditionally consider a hostel product, we identified that they would indeed consider a capsule hotel, because it gave that privacy," Aziz added.

As a Londoner, my usual commute to the office lasts just over 30 minutes, so the hotel doesn't offer much in terms of convenience for me, but I can see the appeal for those living further away from the city.

When I awoke in the morning, I almost forgot that I wasn't in my bed at home. After a quick shower, I got ready inside my capsule before heading out and joining the throng of commuters in central London.