Office rents in London's prime locations are poised to reach record levels, driven by a significant squeeze on available space. Property consultancy Carter Jonas forecasts that by the second quarter of next year, typical rents for top-tier offices in West End districts like Mayfair and St James's could hit £200 per square foot. Concurrently, average rents for grade-A offices in the City of London are projected to reach £100 per square foot.
This surge in prices is occurring as businesses actively seek out buildings, including those still under construction, to secure locations ahead of competitors and to support their expansion plans. According to Carter Jonas's analysis, current prime West End rents stand at £180 per square foot, representing an increase of over 60 percent in the last five years. In the Square Mile, prime banking and insurance district rents have risen 32 percent over the same period, now averaging £92.50 per square foot.
Michael Pain, head of Carter Jonas’ London tenant representation team, attributed the rental growth to a combination of strong demand, limited options, and constrained supply. He indicated that it may take until the early 2030s for supply to meet demand.
New rental benchmarks have already been established in the Square Mile. Notably, the tech firm Ripple reportedly agreed to a record £160 per square foot for the top floor of Brookfield Properties’ One Leadenhall skyscraper within the past year.
Post-pandemic, companies are increasingly prioritizing office spaces with good transport links, amenities that help attract employees, and social and wellbeing facilities that cannot be replicated in a home environment, according to Merrik Baggallay, managing director at real estate investment firm BGO. Knight Frank estimates that the total active demand for London offices has increased to 14.3 million square feet, up from 10 million square feet a year prior. Shabab Qadar, head of London research at Knight Frank, stated that for many businesses, the office now functions as a crucial tool for talent acquisition and retention, thus placing a premium on properties that foster employee wellbeing, collaboration, and productivity.