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Content specialist in office design and build.
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London Office Market Overview
The London office market gained significant momentum in the most recent quarter, with take-up reaching approximately 3.2 million sq ft — a 29% increase on Q1 and 17% above the 10-year quarterly average. This marks one of the strongest quarters for leasing activity since the pandemic, driven by a resurgence in large-scale transactions and a continued flight to quality. Notably, a record number of deals over 100,000 sq ft transacted during the quarter, with many occupiers securing space well in advance through pre-lets.
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This uptick in demand underscores the growing preference for best-in-class, sustainable offices in core locations. Real estate strategies are increasingly focused on consolidating space into higher-quality, amenity-rich buildings that support hybrid working and ESG objectives.
While macroeconomic uncertainty and hybrid working patterns continue to challenge parts of the market, the limited supply of high-quality new or refurbished space is underpinning rental growth across prime locations. Overall, market sentiment has improved markedly through the first half of 2025, with many landlords reporting increased viewing activity and greater urgency among occupiers to secure space before prime stock is absorbed.
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Prime rent in London
The limited availability of high-quality, ESG-compliant office space continues to drive rental growth across London’s prime submarkets. In Q2 2025, prime rents in the West End core surged to £160 per sq ft, reflecting a 9% quarterly increase and a 21.7% year-on-year rise, marking a new high for this premium market. Submarkets such as Marylebone also saw quarterly uplifts, with prime rents reaching £110 per sq ft, driven by consistent take-up of refurbished, best-in-class space.
In the City core, prime rents saw a marginal increase to £100 per sq ft, supported by resilient demand and constrained availability. Some ultra-prime assets, particularly in tower developments like 22 Bishopsgate, continue to command headline rents in excess of £115 per sq ft, depending on floorplate and amenity offer.
Other active submarkets such as Shoreditch, Farringdon, and Victoria have also seen headline rents edge upward, generally falling within the £90 to £95 per sq ft range. In emerging fringe locations, growth has been more modest, but rising fit-out costs and occupier expectations for better-quality environments are pushing rents higher across the board.
This ongoing rental growth reinforces the strength of the two-tier market: while demand for Grade A, sustainable office space continues to intensify, lower-quality stock remains under pressure. Occupiers are prioritising buildings that align with their ESG targets, offer long-term occupational efficiency, and support talent attraction strategies. As a result, the rental gap between best-in-class space and secondary stock is expected to widen further through the remainder of 2025.
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The cost of office space in London in 2025
Borough Grade A Rent (per sq ft) Grade B Rent (per sq ft) Knightsbridge £97.50 - £110 £70 - £90 Hammersmith & White City £55 - £65 £40 - £50 Victoria £90 - £95 £65 - £75 Paddington £80 - £90 £65 - £75 Chiswick £45 - £55 £35 - £45 St. James’s & Mayfair £120 - £160 £75 - £105 Covent Garden £85 - £95 £65 - £80 Soho £95 - £115 £70 - £85 North Oxford Street (East & West) £80 - £95 £65 - £77.50 Midtown £70 - £85 £50 - £67.50 Holborn & Bloomsbury £75 - £90 £65 - £72.50 London Bridge & Southbank £75 - £90 £60 - £70 City £87.50 - £100 £70 - £80 King’s Cross & Euston £85 - £95 £60 - £80 Clerkenwell & Farringdon £85 - £95 £62.50 - £77.50 Shoreditch & Old Street £75 - £82.50 £55 - £70 Whitechapel & Aldgate £50 - £65 £35 - £45 Hackney & London Fields £35 - £42.50 £25 - £32.50
Stratford £45 - £55 £30 - £35 Canary Wharf £50 - £60 £35 - £45 Battersea & Nine Elms £45 - £60 £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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Contact us for more information about office rental costs in London.
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Vertical market activity
The financial services sector remained the dominant driver of office demand in London during Q2 2025, accounting for an estimated 35% of total take-up. Major transactions included Squarepoint Capital’s 398,000 sq ft pre-let at 65 Gresham Street, EC2, and State Street’s 191,000 sq ft acquisition of 100 New Bridge Street, EC4. This continued activity reflects the sector’s focus on securing future-proofed, centrally located space with strong ESG credentials.
Professional services followed closely, contributing ~25% of take-up. Notable deals included McDermott Will & Emery’s 112,000 sq ft pre-let at 7 Brook Street, W1, underscoring the sector’s preference for premium West End locations with proximity to clients and amenities.
The TMT (Technology, Media, and Telecommunications) sector also demonstrated solid activity, accounting for around 14% of leasing volume, with occupiers focusing on creative hubs such as Shoreditch, Southbank, and Farringdon. Key lettings by firms in the gaming, streaming, and creative technology industries were concentrated in refurbished assets that offered strong connectivity, collaborative spaces, and employee-centric design.
The public and education sectors maintained a steady presence, representing a smaller but stable share of demand. A standout transaction came from the London School of Economics, which signed for 188,000 sq ft at Centrium, Aldwych — highlighting the continued role of the higher education sector in supporting wider market resilience.
The overall trend reinforces the flight to quality, with nearly all significant lettings in Q2 involving new or refurbished Grade A space. Occupiers across sectors are aligning real estate strategies with corporate ESG goals, workplace flexibility, and talent retention, leading to sustained demand for buildings that meet the highest standards of design, sustainability, and location.
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Demand for quality office space
In Q2 alone, over 70% of all take-up involved new or comprehensively refurbished space, with pre-lets accounting for a significant share of activity. This trend reflects broader strategic priorities, with businesses increasingly aligning real estate decisions with environmental performance and long-term cost savings. This is reinforced by regulatory momentum, with all new buildings in London required to be net zero by 2030, and existing stock needing to achieve EPC ‘B’ by 2030—a target that 80% of London offices currently do not meet.
Landlords who have invested in sustainable design, retrofits, and upgraded amenities are outperforming the market, as secondary and tertiary stock continues to struggle. The gap between Grade A and Grade B performance is widening, not only in terms of rent and occupancy but also in tenant retention and leasing velocity.
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Developers and investors are responding accordingly: refurbishment now dominates the development pipeline, with 83% of new space delivered in H1 2025 comprising repositioned existing buildings rather than new construction. This shift supports both environmental goals and occupier preferences, with many tenants favouring retrofit schemes in central locations that combine historic character with modern efficiency.
In today’s evolving market, quality office space is a baseline requirement. Whether consolidating, relocating, or renewing, London’s occupiers are choosing buildings that support sustainability, wellbeing, and the hybrid work model.
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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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Development activity
Development activity across London remains robust, albeit increasingly concentrated on refurbishment-led projects. In H1 2025, 83% of new office supply was delivered through redevelopment or retrofit schemes, reflecting the market’s adaptation to stricter energy efficiency regulations and occupier demand for sustainable space.
New construction starts have slowed slightly compared to the peaks of 2023, but overall volumes remain above the 10-year average. This is driven by ongoing pressure to upgrade existing stock ahead of upcoming EPC milestones: a minimum rating of ‘C’ by 2027 and ‘B’ by 2030. These changes will affect as much as 80% of London’s office inventory, fuelling sustained activity in asset repositioning and environmental upgrades.
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The West End has emerged as the most active development submarket, led by schemes in Mayfair, Soho, and Fitzrovia, where occupier demand and rental growth are strongest. Notable examples include the retrofit of 7 Brook Street, W1 (pre-let to McDermott Will & Emery), and the ongoing transformation of heritage buildings into high-end, net-zero compliant workplaces.
Looking ahead, the development pipeline is tightening. The volume of space under construction across Central London fell to around 14 million sq ft by the end of Q2, with less than half of this space available. This suggests a potential future undersupply of quality space, particularly from 2026 onward, which could intensify competition for best-in-class assets.
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Leasing activity
Leasing activity across London’s office market showed strong momentum through the first half of 2025, with total take-up reaching approximately 5.5 million sq ft. This marks a notable improvement on the same period in 2024 and places H1 broadly in line with the 10-year average. In Q2 alone, leasing volumes surged to around 3.2 million sq ft, representing a 29% increase quarter-on-quarter and a 17% uplift on the long-term norm.
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The quarter was defined by a resurgence in large-scale lettings, with a record number of deals over 100,000 sq ft — most of which were pre-lets in new or refurbished buildings. These transactions underscore the continued flight to quality, with demand concentrated in Grade A stock offering sustainability credentials, excellent design, and flexible work environments. Over 70% of take-up in Q2 was for new or comprehensively refurbished space, which is well above the long-term average.
As occupiers continue to reassess their office strategies, many are consolidating into smaller footprints but in better buildings — driving demand for quality over quantity. This shift is fuelling further competition for best-in-class space, especially in core markets like the West End, Midtown, and the City.
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The outlook for London office space
The London office market is undergoing a period of transition as we continue further 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.
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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.
Investor confidence is gradually returning, supported by stabilising interest rates and growing liquidity for value-add and core-plus opportunities. While investment volumes remain below the long-term average, key indicators such as pricing resilience, under-offer volumes, and overseas capital activity are moving in a positive direction. Prime yields have held firm—3.75% in the West End and 5.25% in the City—demonstrating continued confidence in London’s core office markets.
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.
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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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For further advice on the London office market, our workplace experts can guide you through both tenant and landlord markets in greater detail.
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Contact us
Get in touch to discuss your potential office space costs
020 7553 9500
info@oktra.co.uk
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