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The London Office Market - Q1 2026

Explore the latest data on London office rents, leasing activity, and market forecasts in this comprehensive Q1 2026 update. Download now to understand how global trends and local supply constraints are shaping opportunities for tenants and investors.

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Report summary

London office rents rose across almost every central London sub-market in Q1 2026, led by a 12.5% year-on-year jump in Mayfair and St James's to £180 per sq ft. The war in the Middle East and the resulting spike in oil prices have introduced fresh economic uncertainty, but acute Grade A supply shortages mean landlords are responding with longer rent-free periods rather than rent cuts.

Pre-letting activity dominated Q1, led by the AI, legal and financial services sectors — Databricks' 136,000 sq ft pre-let in Fitzrovia alone tripled its London footprint. With no significant new Grade A space landing until Q3 2027, footloose tenants that start their search early are best placed to secure suitable space within budget.

At a glance / callouts

Mayfair & St James's - up 12.5% YoY to £180/sq ft
Brent crude - peaked at $118.35/bbl, eased to $94.59
New Grade A supply - none at scale before Q3 2027

City of London Prime - up 2.86% YoY to £90/sq ft
Rent-free periods - widening as landlords hold rents
Databricks - pre-let 136,000 sq ft, Fitzrovia

Back To The 1970s?

It is Harold Wilson (Prime Minister 1964 - 1970 & 1974 - 76) who is credited with coining the phrase “A week is a long time in politics.” He wasn’t wrong.

At the beginning of the year, conditions appeared broadly supportive for the global business community, with greater clarity in relation to US trade policy, easing inflation, expectations of lower interest rates and a tentative improvement in business confidence. Fast forward a couple of months to President Trump’s decision to go to war with Iran and the picture looks rather different – with the spectre of inflation and higher interest rates returning.

A different era

So are we back to the 1970s? The price of oil has not quadrupled. Demand for oil as an energy source has declined as many once oil-dependent countries have invested in nuclear, solar, wind and hydro-electric power. Production is also far less geographically concentrated than in the 1970s — the USA, Russia, China, Norway and Brazil are now all significant contributors, weakening OAPEC's grip on prices. There are currently no fuel shortages and no rationing. The world is a very different place to 1973 and 1979.

Opportunities for footloose tenants

In the short term, uncertainty is likely to boost demand from smaller businesses for serviced and managed space, as they adopt a "wait and see" approach. Larger businesses — particularly international corporates in technology (AI especially) and financial services — are, by contrast, pressing on with relocation plans, concerned that if they leave things to the last minute they won't find operationally suitable space within budget.

Michael Pain

Despite the rise in the price of oil and its impact on inflation and interest rates, London is likely to weather the ensuing economic uncertainty better than other capital cities because of its status as a global financial services and technology hub.

Head of Tenant Representation Team, Carter Jonas

Full Report

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While the war in the Middle East is likely to create inflationary pressures and may lead to higher interest rates, this is anticipated to be a short-run phenomenon, provided the ceasefire culminates in a peace settlement. London is well placed to weather the disruption given its status as a global financial and technology hub. Business leaders have good reason to be optimistic about the future. And no, we are not back to the 1970s.