What’s ahead for Central London office market (Q3 2025)

The Central London office market faces a critical dilemma with rising vacancy rates and heightened demand for high-quality space. Investors and developers are now stuck between marketing outdated stock and setting up new premium and ESG-compliant workplaces. To understand this transition, here is a look at the current market and the trends shaping what lies ahead.

An increasing demand for sustainability and premium location preferences significantly influences the London office market’s transition. As London is one of the best Work-Life balance areas to work in the world (ranked globally in 11th place in 2025), the working landscape here can get competitive. Here is a general overview of what is currently happening.

Central London’s office market showed resilience in August 2025, underscoring the ongoing “flight to quality.” Take-up reached 0.7 million sq ft, led by several large occupier transactions, while three deals above £50 million closed during the same month, reflecting renewed investor appetite for prime, income-producing assets (Source).

Vacancy trends highlight the market’s polarisation. The West End’s Grade A vacancy rate was just 1.4%, underscoring acute undersupply in the capital’s most prestigious submarket, while the City’s Grade A vacancy tightened to around 2% (Source). Secondary stock, by contrast, continues to struggle as occupiers focus on sustainable, centrally located, best-in-class buildings.

This polarisation is not only visible between the City and the West End, but also within emerging submarkets: Fitzrovia’s 2025 rental trends now compare directly with Mayfair and Soho, reflecting how quality and location are reshaping values across Central London.

Source: BNP Paribas Real Estate

Demand for prime Grade A office space continues to drive rents upwards, particularly in the West End. Prime West End headline rents reached about £162.50 per sq ft in August 2025, while City prime rents stood near £88.50 per sq ft (Source). Trophy, super-prime assets in Mayfair and St James’s continue to achieve £160+ per sq ft.

As London is currently rated one of the best areas to work, the demand for premium locations and amenities reveals that today’s office is no longer about cost. It is a strategy to attract talent, impress clients, and express brand identity.

Source: Statista 2025

As we move through 2025, several key trends are shaping the office market, influencing how businesses approach their office needs and investment strategies in the coming months.

Flight to quality remains strong

Flight to quality is among the most enduring themes of the post-pandemic Central London office market. Tenants are increasingly shifting to Grade A office spaces that offer premium features like advanced air filtration, wellness facilities, and sustainable building designs. The trend reflects a growing desire among occupiers to use office environments as tools to attract clients, boost productivity, and align with ESG goals.

Location still matters: even top-grade offices in poorly connected areas can still struggle to attract occupiers.

Hybrid work models reshape office demands

Adopting hybrid office (1) has fundamentally influenced what tenants look for in office space. Flexibility in office usage is no longer one of the most desirable Central London office advantages. Rather, it has become non-negotiable as businesses now look for solutions that allow them to scale up or down according to their needs. While this shift started as a trend, it is slowly becoming a norm.

For instance, almost 60% of office transactions completed in 2023 involved managed solutions, and the trend continued into Q1 2024, rising slightly to 63%. The demand for flexible work models is also expected to increase in 2025 as tenants seek scalable office solutions with better leasing terms.

Rethinking flexible office for employee wellbeing

Employee office preferences are changing from a place to complete tasks to one where they can collaborate and feel a sense of comfort. For this reason, investors and developers emphasise the destination office concept by creating spaces that focus on employee wellbeing. This includes building all-inclusive flexible office spaces (2) with amenities like wellness facilities, breakout zones, and cafes.

Research also shows that the demand for the right offices is rising. For instance, Central London’s take-up reached 3.5 million per square foot at the end of 2024, a 16% rise quarter-on-quarter. This exceeded the long-term Q4 average by 3%, indicating a stabilising market.

Investment confidence is returning

Investor sentiment is stabilising after a period of uncertainty. In Q4 2024, Central London office investment volumes reached £1.6 billion, indicating a 22% quarter-on-quarter increase. This renewed confidence primarily focuses on prime, income-generating properties, particularly those that demonstrate tenant stability.

Foreign and institutional investors also show renewed interest in the growing office market. For instance, performance metrics indicate that more property development finance firms are willing to support projects that meet their ESG targets. This increased recognition has seen around 43% of institutional investors interested in assets with strong ESG credentials.

Sustainability & ESG is now the core

Sustainability and ESG are no longer optional- they are core value drivers in today’s office market. The UK’s Net Zero goals and the Financial Reporting Council’s 2025-2028 strategy to enhance corporate sustainability reporting add regulatory pressure to investors. These developments are compelling landlords to embrace more of sustainable office designs (3), with energy-efficient systems, sustainable construction materials, and wellness-focused amenities. However, tenants should expect a higher rent increase, especially those eyeing premium, ESG-focused properties.

At the same time, EPC ratings regulation is creating real urgency. Under the UK’s Minimum Energy Efficiency Standards, offices must reach at least EPC C by 2027–28 and EPC B by 2030. Currently, more than 80% of London offices fall short of these levels. This means landlords who act early to refurbish can protect asset value, while those who delay risk higher costs, vacant space, or even stranded assets.

Prime offices are running out

London’s newest Grade A offices are almost fully occupied, with vacancy at just 1.7–1.9% in Q2 2025. Older buildings, however, tell a different story, with double-digit vacancy levels. The market is clearly split: the best buildings are in short supply, while weaker ones struggle to find tenants.

Fewer new offices after 2025

This year has brought a wave of new completions, but the pipeline will slow sharply from 2026 onwards. Much of the space still to be delivered is already pre-let, meaning businesses will have fewer choices when looking for modern, ESG-compliant offices. With supply tightening, competition for top-quality space is set to grow.

Investor focus stays on prime

Investment activity is improving, but the real focus is on quality. Prime London office yields have held steady at around 5.9% since mid-2025. Well-let Grade A buildings are holding value, while older, secondary offices remain under pressure.

In this article:

(1) How to design a hybrid office that works for everyone

(2) What does a flexible office look like?

(3) 9 smart ways to build sustainable office designs

(4) Fitzrovia’s office rental price trends 2025: comparison with Mayfair & Soho