The Cost of London Office Space in 2025

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Patrick Isitt
Senior Content Manager
Content specialist in office design and build.

London Office Market Overview

The London office market saw a significant uplift in the most recent quarter, with take-up reaching 2.87 million sq ft, marking a 30.45% increase quarter-on-quarter. This growth reflects a notable rebound in leasing activity, driven by sustained demand for high-quality, Grade A spaces. However, the figure remains 4.33% below the 10-year quarterly average of 3.0 million sq ft, highlighting the continued challenges posed by macroeconomic conditions and hybrid working patterns.

Key drivers of leasing activity included significant pre-let deals and a sustained flight to quality, as occupiers prioritised modern, sustainable and well-located spaces. Both the City and West End submarkets continue to dominate activity, underpinned by a flight to quality as occupiers prioritise modern, sustainable office environments.

Despite the challenges posed by hybrid working patterns and stricter EPC regulations, a tightening supply of newly built and refurbished spaces has supported rental growth, with prime rents in key submarkets continuing to rise. These trends, coupled with growing investor confidence, paint a cautiously optimistic outlook for 2025.

Prime rent in London

A limited supply of best-in-class spaces has led to further growth in London’s prime rent, with the West End core increasing to £150 per sq ft. Elsewhere in the Capital, the City sits at £85 per sq ft, while the Shoreditch and Victoria submarkets also saw an increase.

Prime rents across London continued to rise towards the end of 2024, fuelled by sustained demand for high-quality office spaces and a limited supply of best-in-class stock. Prime rents hit £150 per sq ft in the West End, while the City core rose marginally to £87.50 per sq ft. Submarkets such as Farringdon and Midtown achieved £95 per sq ft and £80 per sq ft, respectively, further illustrating the market’s flight to quality.

These figures highlight a well-established two-tier market, where demand for sustainable, high-quality spaces continues to drive rental growth, while lower-grade stock faces increasing pressure to meet evolving occupier expectations. This trend is expected to persist as businesses prioritise ESG credentials and modern amenities in their office choices.

Vertical market activity

The finance sector dominated London’s office market in the most recent quarter, accounting for 31% of total take-up, bolstered by headline transactions such as Legal & General’s pre-let of 186,648 sq ft at Woolgate, EC2. This reflects the sector’s ongoing demand for prime, sustainable spaces in core locations.

The professional services sector followed, contributing 29% of total take-up. Notable activity included BDO LLP’s 218,496 sq ft lease at The M Building, marking the largest-ever letting in Marylebone and underscoring the sector’s preference for high-quality, well-located developments.

The TMT (Technology, Media, and Telecommunications) sector made up 15% of overall take-up, maintaining its position as a key driver of demand. Meanwhile, the public sector accounted for 8%, highlighting its steady presence in the market.

The cost of office space in London in 2025

Borough	Grade A Rent (per sq ft)	Grade B Rent (per sq ft)
Knightsbridge	£90 - £102.50	£70 - £90
Hammersmith & White City	£50 - £60	£37.50 - £50
Victoria	£80 - £92.50	£60 - £75
Paddington	£75 - £87.50	£60 - £70
Chiswick	£45 - £55	£35 - £45
St. James’s & Mayfair	£115 - £150	£70 - £102.50
Covent Garden	£80 - £92.50	£57.50 - £75
Soho	£90 - £105	£65 - £82.50
North Oxford Street (East & West)	£80 - £92.50	£62.50 - £75
Midtown	£70 - £82.50	£50 - £67.50
Holborn & Bloomsbury	£72.50 - £85	£65 - £72.50
London Bridge & Southbank	£65 - £82.50	£55 - £62.50
City	£75 - £87.50	£65 - £75
King’s Cross & Euston	£77.50 - £90	£55 - £75
Clerkenwell & Farringdon	£80 - £95	£62.50 - £77.50
Shoreditch & Old Street	£70 - £77.50	£55 - £70
Whitechapel & Aldgate	£50 - £60	£35 - £45
Hackney & London Fields	£35 - £42.50	£25 - £32.50
Stratford	£45 - £55	£30 - £35
Canary Wharf	£50 - £57.50	£35 - £45
Battersea & Nine Elms	£35 - £57.50	£20 - £30
Camden & Kentish Town	£45 - £60	£40 - £50

These costs are a guide provided by local commercial property experts and rent reports. Costs are updated each quarter, and are subject to change.

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Demand for quality office space

The demand for high-quality, sustainable office spaces remains a dominant trend in London’s office market, as occupiers increasingly prioritise properties that align with ESG goals and employee expectations. Grade A spaces, particularly those offering modern amenities, energy efficiency and exceptional design are driving leasing activity, accounting for over 60% of space under offer in the most recent quarter.

To help improve the quality of space, tenants and landlords will invest in technology and sustainability to retain and attract tenants. On top of prioritising sustainable building credentials, all new buildings in London need to be net zero by 2030. The Net Zero Carbon Buildings Declaration extends to all existing buildings also being brought up to standard by 2050. This will shape investment activity with asset managers wanting to secure properties with the correct credentials which will subsequently reduce the appeal of the properties which need to be upgraded to hit certain goals.

Landlords and developers who invest in retrofitting and upgrading their properties are best positioned to capture this demand. As the gap between Grade A and Grade B spaces widens, quality office space is no longer just a preference—it is a necessity in today’s evolving market.

The rise of hybrid-driven workplace design

Hybrid working has become a major force shaping the London office market, transforming the way businesses and landlords approach workspace design. Features such as flexible seating, collaborative zones, and smart meeting rooms are now key requirements, alongside wellness-focused elements like biophilic design, natural light, and quiet zones to enhance employee satisfaction and productivity.
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This shift is also influencing leasing strategies, with occupiers favouring flexible lease terms and prioritising newly built or refurbished Grade A spaces that align with their evolving needs. By adapting to these trends, landlords and developers can attract tenants seeking spaces that support innovation, collaboration and the future of work.

Development activity

While new construction starts have slowed compared to elevated levels in 2023, development volumes remain above the ten-year average, reflecting the market’s ongoing adaptation to stricter EPC regulations. With the minimum EPC standard rising to C in 2027 and B by 2030, an estimated 80% of London’s office stock requires upgrades. As a result, much of the pipeline activity focuses on retrofitting and redeveloping existing assets to meet these higher standards.

The West End leads development activity, driven by several large new starts in key submarkets like Mayfair and Soho. Meanwhile, the City continues to see significant completions, including energy-efficient projects such as Woolgate and Blossom Yard & Studios, which cater to the rising demand for net-zero office spaces.

Leasing activity

Leasing activity in London’s office market showed strong momentum in the most recent quarter, with take-up reaching 2.87 million sq ft, representing a 30.45% increase quarter-on-quarter. This brings the year-to-date total to 7.17 million sq ft, reflecting a slight improvement compared to last year, though still 4.33% below the 10-year quarterly average. The increase was driven by a flight to quality, as occupiers prioritised Grade A spaces in prime locations.

The two-tier market continues to define leasing trends, with over 60% of current space under offer comprising newly built or refurbished properties. Tenants are showing a strong preference for high-quality, sustainable buildings equipped with modern amenities and flexible layouts.

Despite challenges such as elevated vacancy rates in lower-quality stock, demand for prime office space remains resilient. As businesses adapt to hybrid working patterns, many are consolidating their office footprints while upgrading to better-designed, flexible workspaces. This trend underscores the critical role of quality and sustainability in shaping leasing decisions, ensuring continued activity in the Grade A segment.

The outlook for London office space

The London office market is undergoing a period of transition as we move into 2025, shaped by evolving tenant priorities and regulatory requirements. The demand for high-quality, sustainable office spaces is expected to remain strong as businesses adapt to hybrid working and prioritise ESG commitments. The continued focus on Grade A spaces highlights the flight to quality, with occupiers seeking energy-efficient, modern buildings that align with employee expectations and corporate goals.

However, challenges persist. Elevated vacancy rates for lower-quality stock and stricter EPC regulations requiring minimum ratings of C by 2027 and B by 2030 will put pressure on landlords to refurbish or retrofit their properties. This regulatory landscape, combined with hybrid working patterns, is expected to widen the gap between Grade A and Grade B spaces, further reinforcing the two-tier market.

On the investment front, market sentiment is showing signs of recovery, with investment volumes in the most recent quarter increasing to £1.2 billion, a 46% quarter-on-quarter rise. This uptick reflects growing confidence in London’s prime office market, particularly for assets that meet future-ready standards. As developers and landlords respond to these trends, we can expect sustained activity in retrofitting and new builds to meet both tenant demands and regulatory benchmarks.

Looking ahead, the resilience of London’s office market will depend on its ability to adapt to these shifts. Flexible leasing structures, enhanced amenities, and investments in technology and sustainability will remain critical to maintaining its global appeal. While challenges remain, the focus on creating adaptable, sustainable and high-quality workplaces will ensure London retains its position as a leading office destination.

The London Office Rent Report

Download our report on average office rent rates for Grade A and Grade B space in London to gain a market overview and analysis of prime rent rates across London submarkets.
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