• New stock expected to fall short of demand, suggesting squeeze to come
London, 7 August 2025 – Central London office take-up totalled 2.55 million sq ft in Q2 2025, according to real estate services firm Cushman & Wakefield.
A record-high 80% of the total take-up in Q2 2025 was Grade A, reflecting a ‘flight to quality’ as firms move to secure space that attracts staff back to the office. Prime rents increased to £88.50 per sq ft in the City and £162.50 per sq ft in the West End over the same period, a 7% and 16% increase respectively over the previous 12 months, showing that occupiers are increasingly willing to pay a premium to secure best-in-class space.
There was 2.21 million sq ft of new space delivered to the market in Q2 2025, the highest quarterly volume since 2020, of which 87% is already pre-let. A further 14.4 million sq ft of additional space is under construction, with 33% pre-let and 41% due for completion in 2025. This leaves just 6.76 million sq ft under construction and available to complete between 2026 and 2030. Given the evident appetite for new, best-in-class stock amongst tenants, the delivery of new stock is expected to fall well short of demand over the near term, suggesting a significant supply squeeze to come.
The City accounted for 56% of the total take-up, with a further 30% taking place in the West End and 15% in East London. The largest deal of the quarter was seen in the West End with McDermott Will & Emery’s 107,000 sq ft pre-let of 7 Brook Street in Mayfair. This contributed to West End take-up totaling 742,000 sq ft in Q2. The market demonstrated strong demand for high-quality space, with 669,000 sq ft of Grade A space leased, up 22% versus the long-term average and accounting for a record breaking 90% of the total volume.
The City too saw a record high share of Grade A take-up, accounting for 86% of the 1.43 million sq ft of leasing activity.
James Campbell, Head of London Office Leasing at Cushman & Wakefield, said: “During the pandemic and recovery period, the rise of home working led many firms to ‘right-size’ by reducing office floorspace, this led to sublease supply surging to a record high in Q1 2021 at 7 million sq ft. The picture looks very different now. Sublease availability has fallen in all but one of the last 11 quarters, to 4 million sq ft in Q2 2025, trending back to pre-pandemic levels. This has been driven by firms taking their space back from the market to reoccupy themselves as employees return to the office. This trend reflects not only the health of the Central London office market and its occupiers, but also demonstrates how the office remains as the primary and preferred place of work. Looking to 2026 and beyond, the constrained development pipeline suggests a further squeeze on the supply of new office space entering the market and a continued demand for Grade A space.”
Investment volumes in the Central London office market in the first half of 2025 were 65% higher than the same period in 2024 and assets available or under offer has risen to £6.85 billion from £5.37 billion in the previous quarter. Core prime office yields moved in by 25 basis points to 5.5% in the City and 3.75% in the West End – the first inward movement in four years. Expectations of continued rate cuts over 2025 and beyond, as well as the international appeal of the Central London office market, provide optimism for further upticks in investment activity and yield compression going forward.
Martin Lay, Chairman, London Offices Capital Markets at Cushman & Wakefield, said: “An inward movement of yields, and a 28% quarter-on-quarter rise in assets available or under offer, both point to a thawing in the market. While deals sizes remain low, the health of the occupational market and continued base rate cuts should help to unlock larger transactions.”
London office occupier trends such as the focus on core markets, occupier loyalty to specific locations and ‘more and better’ motivations are further explored in Cushman & Wakefield’s ‘London Moves’ report.
