London’s Office Market: From Downsizing to Growing Demand and Rising Rents

After years of downsizing and uncertainty, London’s office real estate market is experiencing a robust revival. In 2024, 78% of companies relocating within central London rented larger offices than before, Bloomberg reports, citing data from Cushman & Wakefield.

A total of 4.1 million square feet of new office space was leased, with a net increase of 3.27 million sq ft — a 75% rise year-over-year. The figures cover only moves involving more than 5,000 sq ft. This marks a turning point: after years of empty buildings and remote work meetings, demand is growing — especially for high-quality space.

"It was ‘less,’ then ‘less but better,’ and now it’s ‘more and better’," said Ben Cullen, Head of Offices at Cushman & Wakefield, reflecting on evolving corporate strategies.

According to Kieran Patel, Head of London Office Research at Cushman & Wakefield, many post-pandemic space optimizations are now being reconsidered. Hybrid work requires more flexible spaces — for collaboration, focus, and meetings — making larger and better-designed offices more attractive.

Not all tenants are expanding: 88 companies reduced space in 2024. But overall, demand has shifted toward growth. Financial institutions are leading the charge: Morgan Stanley has kept its Canary Wharf HQ, Deutsche Bank canceled plans to downsize, JPMorgan Chase is exploring expansion in East London, and hedge fund Jane Street is increasing its footprint.

The City and surrounding districts have become hot zones for leasing. In 2024, 64% of all major office deals (over 5,000 sq ft) occurred there — a record. Companies are choosing new locations closer to their old ones to maintain staff commuting patterns and comfort.

Premium Space Drives the Market

Tenants are prioritizing quality. Offices with BREEAM/WELL certifications, modern HVAC, and flexible layouts are most sought-after. Knight Frank reports that in Q1 2025, premium buildings saw the highest demand despite rising costs. Outdated spaces are losing appeal — polarization is growing.

CBRE notes that prime office rents in London rose 6.3% in 2024. For 2025, a 5–10% increase is forecast due to limited supply and high tenant expectations. At the same time, operational costs (including taxes) are rising, especially in the City — potentially boosting interest in areas like Canary Wharf, which still offers high quality at lower costs.

Vacancy trends support the recovery: according to CoStar Group, UK office vacancy dropped from 8.7% in late 2024 to 8.6% in March 2025 — the first drop since the pandemic. Though still above the 4.6% pre-COVID level, this signals renewed interest in physical workspaces.

Office environments are increasingly viewed as drivers of team cohesion and employee engagement. In 2025, more firms are investing in workplace quality — especially in the premium segment — as the office regains its role in shaping corporate culture.