London's Office Market Has Found Its Footing, Now It's About Timing the Climb
After two years of adjustment, Colliers argues that London's office market has moved beyond simply stabilising and is now showing the first sustained upward momentum since the pandemic.
Take-up in Q2 2025 reached 3.2 million sq ft, the strongest quarter for more than 18 months and 17% above the ten-year average. Much of this came from large floorplates, high-quality buildings and pre-lets. The question is no longer whether occupiers want space but whether the right space exists, which puts a premium on timing and choosing the right product.
Demand continues to favour the best buildings, with Grade A accounting for 81% of Q2 deals. In Mayfair and St James's, vacancy for new Grade A space is only 0.6%, a result of limited development as much as strong demand. Just 170,000 sq ft is due to complete in those two submarkets for the remainder of 2025, so shortages are likely to continue.
In the City, the average Grade A transaction grew from 11,366 sq ft to more than 20,000 sq ft over the quarter. Two deals alone, a 404,000 sq ft pre-let to Squarepoint at 65 Gresham Street and a 194,000 sq ft purchase by State Street Bank at 100 New Bridge Street, represented over a third of take-up, pointing to occupiers once again making long-term commitments to secure prime space.
Investors are gradually responding. Q2 investment was £1.85 billion, 20% lower than Q1 but 17% higher than a year earlier, and the West End has now topped £1 billion for three quarters in a row. Prime yields have held at 4.25% in the West End and 5.25% in the City. International buyers, who have made up 76% of this year's investment to date, are taking long-term positions, suggesting many think prices have reached their low point.
