UK London Office Marketbeat Reports

For the data behind the commentary, download the full Q4 2025 UK London Offices Report.

FIVE YEARS ON EITHER SIDE, HOW HAS THE MARKET CHANGED?

As we close on 2025, the predominant trend for the Central London occupational market is one of stability. The recovery in 2021 and 2022 paved way for consistent leasing activity, with annual take-up for the period 2023-2025 hovering between 9.5 to 9.6 million sq ft. Where the real shift has occurred between 2015-2019 and 2021-2025 is the quality of space occupiers are seeking – rising from an annual average of 59% for Grade A space pre-covid, to 64% post-covid. In fact, 2025 recorded the highest ever portion of Grade A leasing activity of 74%. However, there is a real mismatch between demand and supply, and submarket variations are widespread.

Prior to 2020, location was not as much of a consideration – leasing activity was widespread and prime rents were maintained or increasing steadily across most submarkets. Since 2021, however, not withstanding heightened economic uncertainty, preference for Grade A coupled with core locations has seen rents increase at a rapid rate along core locations, centered around key transport hubs, resulting in depleting supply in these submarkets. At the end of 2025, the City Core had just 1.1 years of Grade A supply left, against a 10-year average of 1.7 years; while in the West End, Mayfair and St James’s had 0.7 years and 1.4 years left. This was 49% and 34% below the 10-year average, respectively.

WHAT NEXT?

Looking ahead, the supply of this core Grade A product is reducing at an alarming rate, with the development pipeline thinning over the next two years, the situation having worsened since Trussonomics in 2022. At that point, capital values for Central London offices plummeted rapidly, and income was the main driver for total returns. Furthermore, construction costs escalated, the effects of which continue to impact development viability. According to the BCIS index, build cost increases are forecast over the next two years, and with modest recovery expected for capital values during this period, it is likely that rents will have to continue to do the heavy lifting in the short term.