The Central London office market entered 2026 in a highly polarised position. Demand remains focused on high-quality, well-located and sustainable buildings, while secondary stock continues to struggle with elevated vacancy. Across most submarkets, vacancy rates remain above pre-pandemic levels, although conditions vary significantly by location. Construction activity has slowed materially, with fewer speculative schemes coming forward and many major developments already pre-let prior to completion. Leasing volumes in 2025 were mixed: certain markets such as Marylebone demonstrated exceptional resilience, while others, notably Victoria and the City Fringe, saw softer take-up and rising availability. Rental growth has generally been modest, with prime rents holding firm but incentives remaining important for older or poorer-quality space. Investors remain selective, focusing on best-in-class assets with strong ESG credentials and secure income streams.
MARYLEBONE
Marylebone has been one of the strongest performing Central London submarkets over the past two years. Vacancy stands at just 4.2%, significantly below the London average, supported by steady demand and limited tenant departures. The submarket has seen average annual take-up of 550,000 sq ft over the past five years – higher than pre-pandemic levels – with leasing momentum accelerating through 2025. Around 1 million sq ft was leased in the 15 months to September 2025, representing the strongest period of activity in 14 years. Demand is increasingly driven by occupiers relocating from more expensive districts such as Mayfair. However, supply pressures are emerging, with 710,000 sq ft currently under construction, much of it speculative, which is likely to push vacancies higher over the next 12–24 months. Marylebone asking rents have grown by 2.4% year-on-year, reaching an average of £87.11 per sq ft.
Notable Deal:
· General Atlantic – 50,000 sq ft pre-let at Elephant London (September 2025). This significant commitment illustrates the ongoing attraction of Marylebone for high-profile financial occupiers seeking modern, ESG-led accommodation.
Local Agent Insight:
“Richard Lockhart highlighted the strength of the market, as demonstrated by our recent letting at Wigmore Yard to Trinity Bridge for the entire building on a 10-year lease at well over £100.00 per sq ft.”
MAYFAIR
Mayfair remains one of the tightest office markets in London with a vacancy rate of 3.9%, well below the London average. Demand is driven primarily by financial services and professional firms seeking premium headquarters accommodation. While the number of large transactions has reduced over the past 18 months, competition for the very best space remains intense. A chronic lack of speculative development has kept availability low, particularly for Grade A buildings. Rents continue to reach record levels, with headline rents in excess of £200 per sq ft being achieved. Market asking rents increased by 2.7% year-on-year, averaging £110.58 per sq ft. Some downside risk exists from occupiers relocating to more cost-effective West End locations, but overall market conditions remain robust
Notable Deal:
· McDermott Will & Schulte – 110,000 sq ft pre-let at 63 New Bond Street. The largest Mayfair letting in several years and a clear demonstration of continued appetite for flagship space rumoured to be at circa. £180 per sq ft.
Local Agent Insight:
“Nick Sinclair felt despite some negative press surrounding the departures of Family offices and ultra-high network individuals the Mayfair market is still showing strong demand for the very best product .”
ST JAMES’S
Occupier conditions in St James’s have softened notably over the past two years. Vacancy has risen to 8.8%, and net absorption has turned negative as more tenants vacate than take space. Leasing activity has slowed considerably, with just 300,000 sq ft leased in 2024 and a further decline in 2025. The market is increasingly polarised: premium refurbished buildings continue to attract strong interest, while older stock struggles. Despite weaker overall demand, prime rents remain resilient, with recent transactions approaching £200 per sq ft for best-in-class product. Asking rents have grown by 2.6% over the past year to an average of £101.93 per sq ft.
Notable Deal:
· CD&R – 62,500 sq ft pre-let at 30 Duke Street (May 2025). One of only seven St James’s lettings above 60,000 sq ft this century and a record rent for larger space at £190 per sq ft.
VICTORIA
Victoria remains one of the weakest performing West End submarkets. Vacancy has climbed to 14.4%, the highest in the West End, and net absorption remains negative.
The area continues to suffer from occupiers vacating older stock, with notable exits from Google and several public-sector bodies. However, demand for high-quality space remains evident, particularly from occupiers attracted by strong transport links and large, efficient floorplates. Prime buildings are still securing significant pre-lets, but secondary space faces persistent challenges. Market asking rents have increased modestly by 1.9% year-on-year to £79.16 per sq ft.
Notable Deal:
· Evercore – 135,000 sq ft pre-let at 105 Victoria Street. A landmark transaction demonstrating that top-tier product in Victoria can still command strong demand.
Local Agent Insight:
Crossland Otter Hunt’s Charlotte Steele believes that the uptake of large floorplates in Victoria, through deals such as F1 and Evercore, has prompted many smaller occupiers to relocate to the area especially those in support services.
THE CITY MARKETS (MERGED)
City Core East, City Core North, City Core West & City Fringe
Across the wider City markets, performance has been mixed but improving in key locations. Demand is increasingly concentrated on new or extensively refurbished buildings, with a strong preference for ESG-compliant, amenity-rich offices.
City Core East
Vacancy has tightened to 8.6% following several large renewals and pre-lets. Net absorption over the past 12 months reached 882,000 sq ft, supported by the completion and leasing of major schemes. Average asking rents stand at £65.99 per sq ft with limited new speculative supply coming forward
Key Deal:
· Accenture – 254,376 sq ft lease renewal at 30 Fenchurch Street. The largest transaction in the submarket since 2023, underlining continued commitment from major corporates
Mathis Piquiot feels the Accenture deal highlighted a growing trend where business can often get better value terms from existing Landlord and avoid the cost of large fit outs that often account for all the incentive package offered on an external move.
City Core North
The strongest performing City submarket. Vacancy has fallen sharply to 9.0% from a peak of 13.7% in 2023 due to significant pre-letting activity. Over 93% of space completing in 2025–26 is already pre-let, leaving very little speculative supply. Asking rents average £70.93 per sq ft.
Key Deal:
· Squarepoint – 400,000+ sq ft pre-let at 65 Gresham Street. One of the largest City office commitments in recent years and a major vote of confidence in the market
City Core West
Vacancy has declined steadily to 8.8%, supported by limited new supply and several major commitments. Leasing activity rebounded strongly in late 2025, and asking rents have edged up to £67.07 per sq ft. Construction is now focused largely on pre-let schemes
Key Deal:
· Bristows – 70,000 sq ft pre-let at Bow Bells, Cheapside. A significant relocation illustrating demand for refurbished prime space
City Fringe
The City Fringe has been the weakest of the City submarkets. Vacancy has risen to 14.9%, well above the London average, following significant new deliveries and weaker demand in 2025. No deals over 40,000 sq ft were recorded in the past year, and average rents remain subdued at £58.24 per sq ft.
Key Deal:
· Qube – 32,000 sq ft at The Old Dairy, Shoreditch. The largest leasing transaction in the City Fringe over the last 12 months
Structural Market Themes
Impact of Fit-Out Costs – Renewals and CAT A+ Preference
Across Central London, the cost and complexity of office fit-out has become a decisive factor in occupier decision-making. Many businesses are opting to remain in situ rather than undertake expensive relocations and refurbishments. This is particularly evident in markets such as the City Core North and East, where large corporates have chosen to renew rather than move (e.g., Accenture at 30 Fenchurch Street). Even when tenants do relocate, demand is heavily skewed toward fitted or CAT A+ solutions, which allow faster occupation and reduce capital expenditure. Submarkets with a higher proportion of newly delivered or refurbished space are therefore outperforming those dominated by older stock.
Sub-10,000 sq ft Market – Flexibility and Flight to Quality
The smaller occupier segment has changed structurally since the pandemic. Requirements below 10,000 sq ft are increasingly characterised by shorter lease terms, typically five years with a tenant break at year three, reflecting a desire for operational flexibility. Even in this size range, however, tenants continue to prioritise quality: well-located, amenity-rich and ESG-compliant buildings are consistently outperforming. This “flight to quality” is particularly visible in Marylebone and prime City locations, where smaller fitted suites are letting quickly, while secondary space – especially in Victoria and the City Fringe – remains difficult to move.
Regears and Renewals – A Structural Shift in the London Market
Office regears are playing an increasingly central role in the London market, reflecting both cost pressures and constrained supply. Recent analysis from Knight Frank highlights that around one third of current London office demand is now expected to stay put rather than relocate, with regears accounting for almost 40% of all transactions. The trend is particularly pronounced among larger occupiers, where nearly half of requirements above 100,000 sq ft are likely to renew in situ due to the complexity and expense of moving major footprints. Supply limitations to 2030 are expected to reinforce this behaviour, while landlords are increasingly investing in amenity upgrades and occupier experience to secure long-term commitments. Rather than being defensive, modern regears are now viewed as strategic opportunities that deliver value for both parties through creative deal structures, targeted landlord works and greater cost certainty.(Source: CoStar)