London Office Market Report 2024: Trends, Rents & Investment Insights

London’s office market remains dynamic as businesses continue to adapt to hybrid working, economic conditions, and shifting corporate priorities. Despite high vacancy rates in secondary office spaces, demand for premium, energy-efficient buildings has driven rents to record highs in prime locations. This report explores the key trends, investment landscape, and future outlook for London’s office sector.

1. London Office Rental Market Trends

Rising Rents for Prime Office Space

• High-end office rents have soared past £100 per square foot, with some deals exceeding £120 per square foot in locations such as 22 Bishopsgate.
• Businesses are competing for best-in-class office spaces to attract employees back to in-person work.
• Demand is strongest for Grade A office space offering top-tier amenities, sustainability certifications, and central locations.

Vacancy Rates & Demand Shift

• London’s overall office vacancy rate has risen due to increased availability of older office stock.
• Grade B and C office spaces are struggling to attract tenants, pushing landlords to redevelop or repurpose buildings.
• Leasing activity remains strong, with total take-up in Central London reaching 10.8 million square feet in 2024, exceeding the five-year average.
• The financial and banking sector led demand, accounting for 33% of office leasing.

2. Office Investment Market & Key Transactions

Investment Volumes & Buyer Sentiment

• Total investment in Central London offices reached £6.05 billion in 2024, an 18% decline compared to the previous year.
• The average deal size dropped to £30.7 million, reflecting investor caution due to rising borrowing costs.
• Prime office yields remained steady at 5.75% in the City and 4.00% in the West End.

Key Office Deals & Developments

• Banco Master signed a record-breaking lease at 22 Bishopsgate, paying £122 per square foot.
• Axa IM Alts submitted plans for a 46-story office tower at 63 St Mary Axe, targeting completion in the 2030s.
• Landsec, a major commercial landlord, announced it will reduce office holdings from 65% to one-third of its £10 billion portfolio, shifting focus towards residential property.

3. Future Outlook for London’s Office Market

Sustainability & ESG-Focused Offices

• Demand is rising for energy-efficient buildings with EPC ratings of A or B, as corporate ESG targets drive occupiers toward sustainable offices.
• Developers are prioritising net-zero buildings, which command higher rents and lower vacancy rates.

Hybrid Work & Office Demand

• While hybrid work remains popular, businesses are seeking high-quality office space to encourage employees back to the office.
• Flexible office spaces are growing, particularly in co-working hubs within Shoreditch, Canary Wharf, and King’s Cross.

Market Forecast

• Prime office rents are expected to increase further due to limited supply of high-specification space.
• Investment volumes may recover in late 2025 as interest rates stabilise and confidence returns.
• Older office buildings will continue facing higher vacancy rates, leading to redevelopments into mixed-use or residential properties.

How Fraser Bond Can Help

At Fraser Bond, we specialise in London’s office market, providing expert guidance on:

✅ Office Space Leasing & Investment
✅ Market Research & Rental Forecasts
✅ Commercial Property Portfolio Management

Contact Fraser Bond today to discuss office leasing, investment opportunities, or market insights.