Spotlight: Cardiff Offices – Autumn 2025

Cardiff's office market has seen rapid change over the past five years, with the growth of the city as an attractive investment area and a hub for modernised tech and industry. However, there still remains a mismatch between Grade A demand and supply within the city.

Office occupier activity increased during 2024, with annual take-up totalling 581,643 sq ft, the highest annual take-up recorded since 2017, and also 23% higher than the annual ten-year average. Although the first half of 2025 has been somewhat subdued for take-up, there is continued optimism in the market, with over 300,000 sq ft of known requirements which will materialise in the next couple of years.

The number of office deals in Cardiff has also been historically robust, with an average of 92 deals completed annually over the past decade. This trend has continued into the post-pandemic era, with an average of 90 deals completed over the previous five years, demonstrating Cardiff's reliability and stability as an office market. With many new entrants into the Cardiff office market, including companies in the professional and tech sectors, this has fuelled an increase in the demand for high-quality spaces that can be used for collaboration and innovation.

This became particularly apparent during 2024, with half of take-up being acquired in Grade A buildings. With the increased demand for these spaces, the supply of best-in-class space has decreased annually by 12% since 2020.

The scarcity of high-quality supply in Cardiff has now triggered an increase in the headline rent to £30 per sq ft, which was achieved at One Central Square and Hodge House in Q2 2025, by Stantec UK and Gleeds, respectively. This means that the city has witnessed 20% rental growth over the past year alone, following a period of stagnant rental growth, primarily due to a shortage of high-quality office space.

With the increased shortage of this supply to feed demand from occupiers, this has and will inevitably continue to further rental growth. There has also been a notable narrowing of the gap between refurbishments and new development rental premiums, with the former now commanding the highest rents.

Cardiff is expected to see a minimum increase in rental growth of 23% by 2029, with rents of £32.50 per sq ft expected by the end of the year. This will potentially encourage landlords to seek refurbishments of their existing buildings, while also providing opportunities for new developments to emerge.

The rise of challenger banks

The banking sector has been a standout sector in Cardiff during 2024, with the year seeing the highest annual banking take-up since records began in 2002. The sector leased a total of 166,000 sq ft, with six banking firms acquiring office space.

This is not surprising, as Cardiff has one of the UK’s largest financial and professional services sectors outside of London. The city also boasts a highly skilled and diverse talent pool, which is supported by three universities. This, along with a lower operating cost compared to many regional cities, attracts top companies to the region.

Traditional banks, such as Lloyds Bank, have continued to consolidate their presence within the city. Lloyds, most recently committed to a pre-let of 113,360 sq ft Prime building at John Street. This highlights how important the Welsh capital is for the traditional banks.

However, aside from the traditional banks, challenger banks (smaller retail banks) have been gaining traction in the city, and Cardiff has now become a hub for these types of banks. Whilst most of these banks don't have physical branches, they are increasingly expanding their operations in online banking, with office space used for tech purposes. During 2024, challengers acquired 53,000 sq ft of office space.

Cardiff is a prime example of a city that has become an attractive base for a number of challenger banks, due to local government support and grants, as well as enabling them to tap into the city’s growing tech ecosystem and the local talent pool from the universities.

In particular, the sub-sector stood out during 2024, with four of the six deals in the sector being acquired by challengers. Most notably, Aldermore Bank leased 28,000 sq ft at Two Central Square, further expanding its presence within the city. Other challenger banks in Cardiff include Starling, Tandem, and StreamBank, which highlights that Cardiff is increasingly becoming a cluster for modern banks. This trend is expected to continue in the near future, with government intervention continuing to draw these banks to the city.

Yonder, the UK-based regulated financial institution, also a challenger bank, is looking to open a regional office in Cardiff, the first of its kind in the UK outside of its headquarters in London. This further demonstrates Cardiff's presence as a city to diversify operations, and allow these banks to tap into the emerging tech environment that the city is fostering.

Cardiff life sciences industry set to see sustained growth

Wales’s life sciences industry is crucial to delivering sustained economic growth, according to the UK Government. The life sciences sector in and around Cardiff is a vibrant and rapidly growing part of the Welsh economy, marked by strong research foundations, innovative companies, top-quality universities, and collaborative infrastructure, providing the ultimate landscape for growth.

The growing sector already contributes more than £2.6 billion to the Welsh economy annually and supports more than 12,000 jobs across more than 250 companies, according to Life Sciences Hub Wales.

For example, Cardiff Edge, located off J32 of the M4, provides 180,000 sq ft of life science and innovation space, which has become a popular hub for sectors including drug discovery, therapeutics, and neuroscience. The sector is expected to continue its consistent growth in the near future, with both investment and related infrastructure being part of a broader strategy to attract global pharma firms and stimulate economic growth, which, in turn, will boost demand for high-quality office space.

As well as understanding the importance of the life sciences sector to the Welsh economy, the sector is also at the forefront of cutting-edge work taking place in cancer treatment and genomics. These companies often seek close proximity to leading institutions, such as Cardiff University, which affects their location preferences within the city.

This could potentially result in an increased amount of refurbishment of existing secondary stock in the area, or the development of prime new office space in and around the university campus, to allow these companies to access the talent pool and promote collaboration.

How will government intervention be a boost to Cardiff's investment environment?

Cardiff is among the UK's fastest-growing cities, and has increasingly become part of a host of regions in the UK that have been receiving government support to grow the local and regional economies, boost job growth, and reignite investment within cities.

The Cardiff Capital Region Investment Zone is a joint initiative between the UK and Welsh governments, backed by £160 million in public funding. It aims to drive growth in advanced manufacturing, digital, and technology sectors, with a particular focus on the compound semiconductor cluster in Newport and a science and technology park in Cardiff.

These areas will implement a wide range of initiatives, including tax relief, planning mechanisms, and innovation.

Each of the Investment Zones is focused on supporting growth in at least one of the following: advanced manufacturing, creative industries, digital and tech, green industries, or life sciences. This, in turn, is expected to create 4,000 jobs within the region, and also create 3 million sq ft of manufacturing and research and development (R&D) space, which will inevitably lead to an increased need for office space as these companies move to the city.

A key component of the proposed Investment Zone is the Cardiff Parkway project, which is a proposed new business district with an adjoining railway station. The project has now been granted planning permission and will be part of a 90,000 sq m business district, further improving Cardiff's infrastructure and appeal. The district will support 6,000 jobs and will promote easier access to Cardiff's rail services.

The impact on Cardiff's office market

The Investment Zone is expected to stimulate demand for high-quality office space, particularly for R&D and tech firms, which will seek to expand their presence within the city.

The Cardiff Investment Zone represents a transformative opportunity for the city and region. While current office market metrics show mixed occupancy performance, the strategic focus on innovation and tech will bring large corporates into the market. This, combined with significant public and private investment, is likely to boost office demand and rental levels.

This provides the potential for further development viability for developers and investors due to the quality of existing stock deteriorating, with more active demand and occupiers willing to pay a premium for high-quality office space, which will potentially transpire from the Investment Zone.

With the Investment Zone’s focus on knowledge-intensive sectors, occupiers in these sectors will likely continue to demand highly sustainable and tech-enabled office space where they can collaborate and foster their business. This will accelerate the modernisation of Cardiff’s office stock, motivating landlords to refurbish or redevelop older assets to remain competitive in the market.

Refurbishments fuelling rental growth

Refurbishments are already being seen in the market, with a number of assets within Callaghan Square transferring ownership over the previous 18 months, where refurbishments are proposed. These include two and four Callaghan Square, where rents of £35 to £38 per sq ft are expected to be achieved. It is anticipated that these will be refurbished to a highly sustainable specification (for example, BREEAM Excellent), providing the opportunity to drive further rental growth within the city centre.

Aside from refurbishments, Cardiff also has sites that have the potential for new development; Central Quay stands out as a prime location in the city centre, which is designed to be transformed into a mixed-use development for both residential, retail, and office space, whilst also creating a corporate campus for office occupiers, providing an amenity-rich central area.

The previous ten years of rental growth have been largely stagnant in Cardiff; however, historically, the city has been relatively on par with other regional hubs. Although Big 6 rents have increased rapidly over the past two years, the momentum appears to have now shifted to Cardiff, which is forecast to see a minimum of 23% of headline rental growth over the next five years on existing or refurbished stock.

However, Savills is forecasting that new build office developments will push headline rents into the mid-£40s per sq ft if a pre-let of these were to be secured, which would be on par with headline rents within the Big 6, further allowing Cardiff to be competitive, yet more affordable than other regions.

Cardiff's market outlook

• Cardiff is increasingly seen as a high-potential growth area, which is now being backed by both the Welsh and UK governments; however, challenges remain within the city. Investors are increasingly turning to the Welsh capital for attractively priced opportunities.

• As the city continues to develop and evolve, government intervention and investment are viewed as essential to unlock further growth from private investors by creating a region with high-quality talent and economic attractiveness.

• The continued ageing office infrastructure, planning delays, and viability hinder development. As occupiers continue to seek high-quality office stock, there is an ever-growing need for new office space to feed the demand. This is where the inevitable office rental growth will accelerate, offering incentives for investors and developers to act now.

• Rental increase is expected to continue as new development stalls and Grade A supply remains limited. With the increase in rents occurring in refurbished stock, Savills research shows that if a pre-let new build were to be secured in the city, this could achieve rents in excess of £40 per sq ft in the next five years.

Search for a commercial property in Cardiff

 
Further reading:

Market in Minutes: Cardiff Occupational Office Data H1 2025