Central London Office Market Watch

Leasing activity across Central London slowed during August, with just 491,509 sq ft completing across 41 transactions, with both the City and West End markets experiencing a summer slowdown in activity. This brought year-to-date take-up to 5.92 million sq ft, up 2% on the same period during 2024.

The largest transaction to complete in August was law firm Bristows’ acquisition of the 4th to 7th floors of Bow Bells House, 11 Bread Street, EC4 (70,000 sq ft), on a 15-year lease. This was followed by the only other transaction to complete sized over 50,000 sq ft, RWE’s letting of the 1st and 2nd floors at Northcliffe House, Tudor Street, EC4 (55,864 sq ft).

Despite the summer lull, space under offer rose to its highest level since February, with 640,000 sq ft going under offer in August. This brought the overall quantum of space under offer to 3.4 million sq ft, with four occupiers under offer on office space sized over 100,000 sq ft. Meanwhile, underlying levels of occupier demand continue to remain robust, with active demand up 10% on the same period in 2024, standing at 13.2 million sq ft at the end of August.

In terms of sectors driving demand, the Insurance & Financial Services sector continues to lead leasing activity and has so far accounted for 28% of all space let so far this year. With 2.34 million sq ft of take-up, take-up to this sector is up 32% on the same period in 2024 and 90% above the long-term average for the end of August. Activity from this sector has been driven primarily by the Asset & Investment Management and Private Equity sub-sectors, which together account for the majority of leasing volume. Over half of this take-up has been concentrated in the City Core, while Mayfair and NOX West collectively represent nearly a quarter of the remainder.

The Tech & Media sector follows as the second-largest contributor with a 15% share of overall take-up (by sq ft), with the number of transactions completing to the sector up 8% on 2024. Demand across the remaining sectors is more evenly spread, though the Professional Services sector accounts for the next largest share at 11%. At 1.1 million sq ft, take-up by Professional Services occupiers is 90% above the long-term sector average and already on track to surpass overall take-up to the sector in 2024.

Supply contracted slightly during August, largely due to a 20 basis points (bps) fall to the City vacancy rate, with supply in the West End having remained at the same level. At the end of August, the Central London vacancy rate stood at 7.7%, with 20 million sq ft available.

We are anticipating development completions during Q4 will reach 2.4 million sq ft and will bring end-of-year completions to 9 million sq ft, 52% of which has been pre-let. Overall development activity remains steady, with 17.1 million sq ft currently under construction, just 5% above the volume underway at the end of the same point last year. Already a third of this has been let or is currently under offer, underscoring continued demand for best-in-class buildings. This continued appetite is reflected by the average prime rental growth being experienced across Central London, with the City’s average prime rent now standing at £99.03 per sq ft, up 1% year-on-year, and the West End average at £169.09 per sq ft (up 10% on a year earlier).

City Highlights

West End Highlights

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