London’s offices ‘regain footing’ as deals tick up and prime rents surge
Activity in London’s office market has seen a boost, driven by a strong second quarter marked by a number of high-profile leasings.
Office take-up in the first half of 2025 reached 4.8m sq ft, up four per cent on the long term average, according to data from Savills. Second-quarter leasings were up 18 per cent year on year.
Prime rents continued to climb, up 10 per cent year on year, as top firms compete for best-in-class space amid a flight to quality.
Philip Pearce, director of Savills’ London team, said that the data was “positive… [It] reflects a wide range of businesses across London growing their headcounts.”
While some sectors have been hit hard by tax rises – hospitality and retail, for example – others have seen a boost in 2025.
The insurance and financial sector was the primary driver of leasing activity, rising 34 per cent above its long-term average and accounting for 29 per cent of take-up in the first half of the year, Savills found.
There was also strong demand from hedge funds, international banks and asset management firms.
Ed Bradley, head of central London investment at CBRE, said that the office investment market is regaining its footing in the capital after a “lengthy recovery period following the pandemic”.
“This year we’ve already seen investor momentum building from overseas investors, particularly institutions and sovereign capital,” he added.
Activity plummeted in 2020 and took a long time to recover momentum, with at-home or hybrid working becoming the norm.
Now, however, companies – particularly financial and professional services firms – are pushing staff back to the office for the majority of their working week, reversing a trend which some pundits considered to be permanent.
CBRE found that a surge in major deals from banking and finance firms for lets exceeding 100,000 sq ft drove take-up in the second-quarter.
“Our figures highlight the sustained confidence among businesses in the physical value of office space, accessibility to talent as well as the necessity for global companies to have a dedicated office in the UK’s capital,” head of London deals at CBRE, James Nicholson, said.
Savills’ research also suggested renewed confidence in larger deals: The volume of transactions over 50,000 sq ft was the highest since the first half of 2019, while the number of deals over 100,000 sq ft was at its highest level since 2017.