Commercial Quarterly Examiner – office market update Q4 2025

Average UK office occupancy continues to push higher and reached a new post-pandemic high, increasing to 41.9% in November from of 40.2% in early October according to Remit Consulting’s Return survey.

Pre-pandemic, the consensus is that office occupancy typically hovered around 70%.

Transport for London also tracks demand for its network through footfall by station, and this data highlights that the total number of passengers visiting Zone 1 stations has fallen by -18% between 2019 and 2025. However, throughout 2025, footfall was lowest on Mondays, building through the week and declining again on Fridays, underlining the move towards more days in the office that tend to come in the middle of the week.

Central London offices: Occupational view

• Central London office availability and take-up both declined in Q4 2025, with Grade A space particularly constrained. Weakening activity is symptomatic of ongoing supply challenges and it is putting upward pressure on rents.
• Despite high construction costs putting a brake on new starts in some parts of the market, the City of London Corporation is proactively encouraging future growth, evidenced by several high-rise office proposals to meet anticipated demand.

Central London office availability decreased in Q4 2025 by -6.6% to 29.2 million sf, which represents 22 months’ supply at the post-Covid average rate of take-up. The occupational market for the very best buildings typically called “Grade A” is even tighter. Availability for the best office space decreased by -4.9% in Q4 to 5.1 million sf having grown by 23.2% the previous quarter. This represents 19 months’ supply.

In the City office market, the availability of Grade A office space in Q4 decreased by -6.5% but remains above one million sf, representing nine months’ supply. In the West End, the availability of newly constructed Grade A trophy office space in Q4 decreased by -2.7%. Although there is 928,000 sf of this best-in-class space available across all West End sub-markets only 38,000 sf or 4% of this space is in the core Mayfair and St. James’s sub-markets representing little more than two month’s supply.

Take-up across the central London market decreased by -24% in 2025 to 12.4 million sf from 16.4 million sf in 2024. This was the lowest total since 2021, but may be closely linked to the lack of supply. Docklands was one highlight as availability decreased to its lowest level in seven years. Visa is relocating its European headquarters from Paddington to Canary Wharf in summer 2028 and has agreed a 15-year lease of 300,000 sf at One Canada Square. University College of London School of Management is also reported to be taking a further 50,000 sf in the same building. Moreover, JPMorgan announced in Q4 that it is going ahead with a Foster & Partners designed tower at Riverside South providing three million sf.

Take-up of Grade A space disappointed as it fell -37% to 1.9 million sf in 2025 from 3.1 million sf in 2024, and it’s worth reiterating that this may be aligned with the constrained levels of supply being registered in the market. Leasing activity declined in all sub-markets. In the City and West End markets Grade A take-up fell -14% to 1.1 million sf and -64% to just 185,000 sf respectively. Since the end of the pandemic take-up of this space has averaged 40,000 sf per quarter across all West End sub-markets but there were no lettings of Grade A space in Q4.

In 2025, development completions totalled 2.3 million sf but only 131,000 sf of new space was delivered in the West End. This thin supply pipeline is set to continue with all new construction activity limited to the new construction activity was limited to the City, Midtown and Southbank. Just five new buildings under 100,000 sf started in 2025, compared with nearly 50 in 2018, while 6 developments of 100,000 sf+ have started, compared to 29 in 2015. Developers blame high construction costs, weak capital valuations and planning restrictions, particularly in the West End.

The lack of supply is continuing to put upwards pressure on rents, especially for Grade A stock as the chart shows. Rents have risen in the last two quarters in nearly every sub-market across central London.

Looking to the future, the pipeline in the City is looking strong however, with the Corporation receiving a record-breaking number of applications for high rise office buildings in 2025. To meet future demand, the authority aims to encourage the development of at least 12 million sf of new office space over the coming years. Work has already started on 1 Undershaft on the site of the former St Helen’s Tower with completion expected between 2029 and 2030 and other buildings in the pipeline include 130 Fenchurch Street, 70 Gracechurch Street, 50 Fenchurch Street, 63 St Mary Axe and 99 Bishopsgate.

Central London offices: Investment view

• Central London’s prime office values are projected to rise in 2026, with the West End market showing continued resilience and outperforming other regions, while secondary office values are expected to decline further.
• Investment activity saw a decrease in transaction numbers but an increase in total value, due to a small number of larger value City deals.

The Q4 2025 RICS UK Commercial Property Monitor notes that prime office values are projected to rise by 1.9% in 2026 (compared to a previous forecast of 1%), although respondents to the survey forecast that secondary office values will decline by a further -2%. From a regional perspective, London continues to demonstrate relative resilience as prime office rental and capital values are anticipated to out-perform Rest of UK offices in the year ahead. Reinforcing this somewhat downbeat view the Central London office market recovery stalled in Q4. Capital value growth as measured by MSCI decreased from 1.02% in Q3 to -0.17% in Q4. Year-on-year capital value growth fell to 2.67% in December from 2.99% in September but improved on 2024’s number of -3.27%.

The West End office market continues to be an outlier despite capital growth falling from 1.62% in Q3 it remained positive at 0.14% in Q4. City office valuations fell by-0.22% in Q3 and the decline accelerated to -0.98% in Q4. During 2025 West End capital growth of 4.48% was supported by MRV growth of 8.38%. However, City office capital values have fallen by -1.28% in 2025 whilst rental growth increased to 2.90% from 1.15% in 2024.

The number of Central London office investment transactions in 2025 decreased to 272 from 340 in 2024, but the value of these transactions increased by 6.3% from £5.78 billion in 2024 to £6.14 billion in 2025 supported by a leap in the lot size of City transactions. In 2024, 38 City investment transactions amounted to £557 million with an average transaction size of £14.7 million. In 2025, the volume of 37 City investment transactions increased to £2.365 billion with an average transaction size of £63.9 million. Outside the “Square Mile” the investment market was more lacklustre.

One landmark transaction was Nuveen’s sale to Hayfin Capital and Capreon of 70 St Mary Axe, known as the “Can of Ham” for £340 million. Hayfin are a European alternative asset manager specialising in credit, direct lending, private equity solutions and real estate. Capreon are a London headquartered investment and asset management firm focused on commercial property across the UK and Europe. Nuveen is the asset management arm of the Teachers Insurance and Annuity Association of America (TIAA). The 90 metre, 21 floor building providing 300,000 sf of space was developed by Nuveen in 2019 and is fully let to 13 tenants, with an average lease length of eight years, including law firm Sidley Austin, National Bank of Canada, AIB and Samsung Electronics.

In another notable end of year transaction Henderson Park acquired 70 Fenchurch Street, EC3 from Lloyds Register for an estimated £90 million. Henderson Park are an international real estate investment manager focused on core and core-plus assets, and Lloyd’s Register Group are a global professional, technical and business services organisation. The building currently offers 215,000 sf across 13 floors. The purchaser intends to comprehensively refurbish and reposition the building into modern Grade-A office space providing new roof terraces, the mandatory “End-of-trip” facilities (e.g. showers and cycle storage) and ESG upgrades to strengthen environmental and building performance credentials. The target completion date for the project is 2028. The sale was initiated after Lloyd’s Register relocated its headquarters into the adjacent newly refurbished historic Grade II listed 71 Fenchurch Street.

Rest of UK offices: Occupational view

• Availability of South East and Rest of UK offices represents four years of supply. The market for Grade A space is tighter with 31 months of supply.
• The South East office development pipeline has stalled, with no major new office buildings expected to complete beyond 2026.

Office availability in the South East decreased for the second consecutive quarter by -2.3% in Q4 but increased by 2.3% y-o-y, representing more than four years’ supply at the post-Covid average rate of take-up. Availability across all Rest of UK office markets outside London and the South East increased by 2.4 % in Q4 and by 2.6% year-on-year also representing four years of supply.

South East Grade A availability decreased by -13.3% in Q4 but has increased by 5.2% y-o-y and there is 31 months of supply. Rest of UK Grade A office availability increased by 7.5% in Q4 and 1.1% y-on-y and there is also 31 months of supply.

Headline vacancy rates across all the “Big 6” regional office markets post-pandemic remain elevated. At the end of Q4 2025 the vacancy rate across the UK’s largest regional office markets increased from 9.7% in Q3 to 10.0% and ranged between 7% in Leeds and 11% in Glasgow. However, vacancy rates for Grade A space across all “Big 6” centres is less than 2%. Overall vacancy rates across South Eastern centres decreased from 9.9% in Q3 to 9.6% but limited development activity has left Grade A vacancy rates at just 0.3%.

“Big 6” market rental value growth has increased to 3.5% in the year to December from 2.4% in the year to September. Bristol remains a strong regional office market, but y-o-y rental growth remains 3.8% as it was three months earlier. Manchester is now the strongest regional office centre with y-o-y MRV increasing to 4.5% in Q4 from 0.9% in Q3. However, South East office market rental value growth has increased from 1.1% y-o-y in Q3 to 1.3% in Q4.

In the South East and Rest of UK office markets 68 developments were completed in 2025 providing 4.1 million sf. However, only eight of those buildings had a high enough specification to be classified as “Grade A”. No “Grade A” developments were completed in either Q3 or Q4 2025. The South East office development pipeline has stalled, with no major new office buildings expected to complete beyond 2026. Only one speculative office capable of delivering “Grade A” space in the near term is currently on site. Trehus, One Maidenhead is being developed by Smedvig Capital who describe themselves as part of the Smedvig Family Office, investing out of Stavanger, Norway. Trehus will be a landmark office building at the gateway to Maidenhead’s town centre, set within newly a landscaped public square and part of the wider One Maidenhead development. The building will have a timber-framed construction targeting net zero carbon emissions, providing 79,200 sf of office space over six floors.

At the end of Q3, 1.2 million sf of office space was under construction in the “Big 6” office markets in 12 buildings where 751,000 sf remained available, 38% having been pre-let. By the end of Q4, the Big 6 development pipeline had grown to 1.7 million sf in 14 buildings and availability has risen to 1.0 million sf after 39% of the space has been pre-let.

Latest additions to the pipeline include Plus Ultra Manchester, part of the Upper Brook Street Life Sciences and Innovation District. It comprises a £100 million+ development providing flexible laboratories, offices, cleanrooms and amenity space totalling around 217,000 sf on eight floors to support life sciences, advanced materials, tech and innovation companies, with adaptable floorplates suitable for mixed office and lab use. The building will be 100% electric, targeting high sustainability standards and scheduled for completion in Q1 2028.

Rest of UK offices: Investment market

• Even as the UK’s major regional office investment markets strengthened in Q3, overall investment performance disappointed compared to the All Property average in 2025.
• Manchester and Liverpool have attracted robust levels of inward investment, but the outstanding transaction of 2025 was the sale of the Daubney Project in Oxford to fund further expansion of the Science Park.

The average total return performance across all “Big 6” centres increased to 1.1% in Q4 from 0.9% in Q3 as capital growth improved to -0.4% from -0.9% in Q3. Total returns for the year to December increased to 3.8% from 3.5% in the year to September. This was disappointing compared to 2025’s 7.1% All Property total return but an improvement on “Big 6” office performance of -2.3% in 2024. Capital values decreased by -2.7% y-o-y in December.

The UK’s major regional office investment markets strengthened further in the third quarter when investment volumes increased by 14% to £228 million from £200 million in Q2 but were nevertheless -49% below the post-pandemic quarterly average of £440 million. Preliminary estimates suggest that investment volumes in Q4 decreased by -1% to £226 million. As usual the latest numbers for Q4 are likely to be revised in the coming months.

Investment volumes in the South East also increased in Q3, growing 49% to £285 million from £191 million in Q2. But preliminary estimates suggest that investment volumes in Q4 fell back -53% to £134 million.

Manchester was the destination for almost 30% of investment in the “Big 6” markets in 2025 as investors bought 70 assets worth £146 million. Slightly more unexpectedly, investment in Liverpool’s commercial office market reached £128 million in 2025 in only 13 transactions as we highlighted last quarter.

Oxford Science Park’s sale of part of its estate to the Ellison Institute of Technology (EIT) to enable the expansion of the Ellison Institute’s campus adjacent to the Park, dwarfed all other transactions in Q4. Three buildings on Edmund Halley Road known as the Daubeny Project comprising 448,000 sf were sold for a combined price in the region of £890 million. EIT is planning to develop a further 2 million sf of laboratory and office space on the land purchased from The Oxford Science Park dedicated to health, medical science and generative biology; food security and sustainable agriculture; climate change and managing atmospheric CO2 and AI and robotics.

In Manchester Westminster House, 11 Portland Street and 201 Deansgate were sold in separate Q4 transactions. Westminster House was sold for £34 million by Aviva who had held the asset for 25 years, to a joint venture between Cross Ocean Partners Management and RPG. The building comprises 160,000 sf let to Lloyds Banking Group and others. The multi -let five storey 201 Deansgate comprising 90,000 sf was sold by CBRE Investment Management to French Fund, Corum XL for £28.8 million. It was built in 1997 and refurbished in 2022.

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