London Office Market | Q3 2026

The Q3 2026 report highlights a London office market where demand for high-quality Grade A workspace continues to significantly exceed supply, underpinning rental growth across the capital's core business districts.

While economic and political uncertainty remains, occupier activity from financial services, legal, technology and AI businesses continues to support a resilient market. With development pipelines constrained and substantial volumes of future supply already pre-let, occupiers are increasingly broadening their search to more affordable submarkets.

• Demand remains strongest amongst financial services, legal, technology and AI occupiers, with AI businesses alone leasing more than 500,000 sq ft during the first half of 2026.

• Canary Wharf recorded London's strongest rental growth over the last 12 months (+9.1%), reflecting improving occupier sentiment, Elizabeth Line connectivity and significant cost advantages compared with core Central London locations.

• The City of London continues to experience acute Grade A supply shortages, driving headline rents above £100 psf for prime space and over £150 psf on upper floors of landmark buildings.

• Development pipelines remain constrained, with only 39% of the 26.1 million sq ft pipeline currently under construction and meaningful new supply unlikely to ease market pressures before 2027.

• Prime rents continue to rise across the City and West End, with Mayfair and St James's remaining London's most expensive office market at approximately £264 psf total occupancy cost.

• Pre-letting activity continues to increase, reducing future tenant choice and encouraging occupiers to engage with the market earlier to secure suitable accommodation.

• Owner-occupation is becoming a more prominent strategy, with businesses increasingly evaluating acquisition opportunities alongside traditional leasing options.

Development pipeline

Higher construction costs, elevated financing rates and extensive pre-letting activity continue to limit the availability of future office supply. Although the development pipeline totals approximately 26.1 million sq ft, a significant proportion remains at planning stage, while much of the space under construction is already committed. As a result, occupiers are facing declining choice and longer planning horizons.

Canary Wharf

Canary Wharf's resurgence continues to gather momentum. Strong transport links, improved placemaking, a growing residential and leisure offering, and significantly lower occupancy costs than the City or West End are attracting businesses seeking high-quality office space at better value. Recent major lettings, including Deutsche Bank's 151,000 sq ft commitment, demonstrate growing confidence in the location.

Sustainability

Environmental performance remains a key driver of occupier decision-making. Buildings with strong EPC ratings and modern sustainability credentials continue to command rental premiums and attract the strongest demand. Conversely, older buildings with weaker environmental performance are facing increasing obsolescence and pressure to undergo refurbishment or repositioning.

Occupiers

For occupiers, securing high-quality space is becoming increasingly challenging. Early engagement with the market, flexibility around location and consideration of pre-let opportunities will be essential. Locations including Canary Wharf, Farringdon, Shoreditch, Battersea and Hammersmith are expected to benefit from businesses seeking a balance between quality, connectivity and cost efficiency over the coming year.