How Does Much Office Space in London Cost?

What Does Office Space in London Cost?

London’s office market tells a story of contrasts. At its heart, in the glittering precincts of Mayfair, the City Core North around Bank and Liverpool Street, and the vibrant theatres of Covent Garden, ultra-premium refurbishments command a lofty £68.30 per square foot per annum. Here, BREEAM-Excellent ratings underscore sustainability, while tenants enjoy the luxury of concierge services, panoramic roof terraces and even dedicated cycle hubs—every detail designed to impress.

Venture a little beyond the centre and you’ll find the reliable, no-frills appeal of Secondary 3-Star space. In Paddington’s mews, across the Docklands Core and into north Hammersmith, landlords deliver solid CAT A fit-outs at a more approachable £43.50 psf/pa—some 20–30% less than their prime counterparts. Though these buildings lack the bells and whistles of a five-star tower, they offer professional spaces that suit fast-growing businesses seeking value.

Beyond these, in the outer-core boroughs of Ealing, Greenwich and Croydon, a third tier of older offices can be snapped up for under £35 psf. Tenants here trade proximity for price, accepting longer commutes and more modest specifications in return for budget-friendly leases.

Despite a headline rent increase of approximately 2% year-on-year, the reality on the ground is more nuanced. Generous landlord incentives mean that, once you strip out allowances and factor in inflation, the net effective rents today are largely flat—if not slightly lower—than this time last year. In short, London’s rent averages may read £56.59 psf/pa, but beneath that figure lies a rich tapestry of choice, balancing cost, convenience and character.

What’s Driving Demand?

Net Absorption Trends

In the first quarter of 2025, London’s annual net absorption—the amount of space taken up by tenants minus what they vacate—reached a robust 18.9 million sq ft, the highest since 2019. When take-up consistently outpaces new supply, vacancies tighten, which explains the drop from 10.6% to 10.1%. Review our flight to quality report for deeper insight.

Key Sectoral Moves

Legal and professional services continue to anchor the market, with Simmons & Simmons committing to 155,000 sq ft at 25 Finsbury Circus and McDermott Will & Emery taking 110,000 sq ft on New Bond Street, demonstrating these firms’ appetite for prestigious West End addresses. Read more in our legal office design guide.

Financial institutions are equally active: Squarepoint’s 404,000 sq ft lease at 65 Gresham Street marks the largest transaction since 2023, underlining the sector’s ongoing demand for modern, high-spec space.

Tech and creative companies may not always make headline-grabbing deals, but they are driving significant take-up in Clerkenwell and Shoreditch, favouring flexible, amenity-rich environments that support agile working and collaboration. Our creative breakout areas article covers this trend.

Owner-occupation is also on the rise, with corporates such as State Street purchasing 100 New Bridge Street (195,000 sq ft) to secure long-term control over their workspace and capital expenditure.

The result is clear polarisation: five-star buildings are absorbed swiftly, while lower-grade stock increasingly pivots to alternative uses such as life sciences labs or residential conversions.

The Pipeline of New Space

Although only 2.5 million sq ft of new development began in the past year, a substantial 16.4 million sq ft is currently under construction. Much of this pipeline is concentrated in three key clusters:

• In the City Core North, 2.8 million sq ft is underway with 51% already pre-leased, reinforcing the area’s appeal to finance and professional tenants.
• At King’s Cross and Euston, 1.5 million sq ft is destined primarily for tech headquarters, with 65% pre-leased to high-growth occupiers.
• Meanwhile, in the West End, former department stores—most notably the 445,000 sq ft House of Fraser site—are being transformed into modern, sustainable offices.

Most projects aim for BREEAM Excellent or Outstanding and include wellness amenities such as gyms, roof terraces, cycle hubs and high-end lobbies, reflecting the ongoing flight to quality. For sustainability best practices, see our sustainability services.

Investment and Sales Dynamics

In Q1 2025, London’s office investment turnover reached £1.8 billion, a 25% increase year-on-year but still below the five-year quarterly average of £2.4 billion. Prime West End yields have moved out to around 4.1%—up from 3% before the downturn—while fringe and Docklands yields now exceed 10% amid higher vacancy.

Major transactions include Modon’s £371 million acquisition of a 50% stake in 2 Finsbury Avenue and State Street’s £333 million purchase of 100 New Bridge Street. Notably, Asian investors are net sellers, whereas US capital is re-entering the market in search of attractive yields.

As core stock tightens, value-add and conversion strategies—transforming offices into residential units, life sciences facilities or hotels—remain hot, offering investors alternative routes to unlock value. Our conversion trends report explores this further.

Navigating the Market

Navigating London’s office market can seem complex, but it’s surprisingly intuitive when you break it down. Over the past year, more than 4.5 million square feet of new office space was delivered into a market that absorbed 2.5 million square feet of it. That leaves an overall vacancy rate of 10.1%, down from 10.6% at the end of 2024.

High-quality developments are being taken up almost as quickly as they’re completed, especially where well-known occupiers sign ten-year leases. Global law firms, investment managers, tech companies and retail brands all see value in London’s stable legal system, time-zone alignment with Asia and the Americas, and unrivalled talent pool.

For growing businesses, it’s critical to understand which neighbourhoods offer the right combination of accessibility, amenities and cost to match your culture and budget. This report guides you through the key metrics, unpacks the jargon, and provides the narrative context you need to make confident decisions. Learn more in our office design ideas guide.

Understanding Total Occupancy Cost

When budgeting for office space, headline rent is just the starting point. First, the landlord’s advertised rate—known as headline rent—can vary from around £33 per square foot in older fringe buildings up to well over £100 in prime trophy towers. Next, incentives such as rent-free periods or fit-out contributions often shave 15–25% off that face rent; for example, a typical ten-year lease might include 18–24 months rent-free or £50–£150 per square foot towards your fit-out.

On top of that, you have the service charge and business rates, which cover essential building management and local authority taxes and usually add another 15–20% to the cost in central areas. Your lease terms and break clauses will also influence overall outlay: longer commitments (10–15 years) attract more generous packages but limit flexibility, while shorter five-year deals come at a premium with fewer perks. Finally, consider your fit-out budget: a basic CAT A+ fit-out can start around £60 per square foot, whereas a bespoke CAT B scheme may exceed £200 per square foot. Phasing that fit-out across multiple handovers helps spread capital expenditure and lets teams occupy in stages.

Choosing the Right Neighbourhood

London is a city of micro-markets—each with its own rhythm, price point and appeal. Selecting the right submarket is a strategic decision that reflects your brand positioning, operational requirements and long-term growth ambitions. For detailed submarket analysis, visit our office fit-out experts page.

Mayfair & St James’s commands average rents of £101.91 psf, with around 5% vacancy and minimal incentives. This enclave remains the epitome of prestige, perfect for client-facing businesses that value prime West End addresses.

City Core North—covering Bank, Liverpool Street and the surrounding streets—averages £70.74 psf and typically includes 18–24 months rent-free on standard terms. Vacancy sits near 10%, offering financial and professional services firms a balance of connectivity and value.

Paddington benefits from average rents of £74.61 psf and a tight 4% vacancy rate, driven by excellent rail links and modern building stock. However, competition is intense, so early availability monitoring is essential.

Docklands Core provides significant value at £47.11 psf, with approximately 18% vacancy and incentives up to 36 months rent-free. This submarket is well-suited for occupiers requiring large, open-plan floorplates and willing to trade slightly longer commutes for cost savings.

Hammersmith & Shepherd’s Bush offers rents between £42.14 and £46.81 psf with circa 20% vacancy, underpinned by generous incentive packages that attract back-office operations and tech firms seeking scalable space.

When choosing a location, carefully weigh commute times, amenity ecosystems, building age and sustainability credentials to ensure your chosen neighbourhood aligns with your team’s lifestyle, your brand’s ethos and your budgetary framework. For further help, see our contact page.

Looking Ahead

Modest rent growth of around 2% is expected in 2025, driven by continued flight to quality. While vacancy may tick up as new completions come online in the second half, strong net absorption should re-assert downward pressure heading into 2026. Check our 2025 office design trends for a future-focused outlook.

Investors will maintain their focus on high-quality, amenity-rich stock and creative conversion opportunities, ensuring that London’s office market remains dynamic and resilient.

Practical Advice for Your Team

Before you begin viewing spaces, clarify your needs by mapping headcount, meeting-room requirements and growth projections to ensure you only consider suitably sized options. See our ODI guide for planning templates.

Next, calculate net effective rent by factoring in incentives, service charges, rates and fit-out costs—this gives you a true apples-to-apples comparison.

Engage experts early. Bringing on a skilled project manager and a sustainability consultant at the RFP stage can help streamline negotiations and ensure your space meets both budgetary and ESG goals.

Negotiate phased handovers to reduce operational downtime and spread capital expenditure. This approach allows different teams to move in as fit-out stages complete.

Still have questions? Contact us.