Demand for London offices hits post-financial crisis high
Demand for office space in London rose to its highest first-quarter level since the financial crisis in 2025, according to new data.
Around 1.2m sq ft of space was let in Greater London and the South East during the first quarter of 2025, up 39 per cent on the final quarter of 2024, according to Knight Frank.
London experienced a significant uptick in demand for office space last year after firms started to encourage employees to return to the workplace, and looming tighter environmental rules created a ‘flight to quality’.
“Investors are slowly buying into the demand and prime rental growth story in new office buildings, which continue to attract blue-chip tenants on strong lease terms,” Simon Rickards, head of UK capital markets at Knight Frank, said.
While Rickards said that investment activity “hinges on pricing confidence”, he said property companies are “increasingly recognising the current window of opportunity”.
“Many are eyeing value add deals given larger upside potential because of depressed values and shortage of modern office stock,” he added.
Nearly nine tenths – 86 per cent – of the space let in the first quarter was in new grade A buildings, up from 80 per cent in 2024.
“Landlords bringing new or refurbished offices into undersupplied markets are often able to command higher rents compared to historic levels, with certain markets witnessing double-digit growth year on year,” Roddy Abram, Head of South East & Greater London Offices, said.
Panmure Liberum analysts have predicted that prime new build London office rents are set to double versus 2021 levels.
