Cushman & Wakefield reports that Central London’s office market ended 2025 with firm momentum and a clear structural shift in demand toward the very best buildings in the best connected locations. Fourth-quarter take-up reached 2.88 million sq ft, 17% above the ten-year average, with Grade A accounting for 72% of leasing in the quarter and a record 74% across 2025. This represents a decisive change from the pre-Covid period when the Grade A share averaged 59%.
James Campbell, Head of London Offices Leasing at Cushman & Wakefield, said: “The market is no longer debating whether quality matters. It is now about how quickly the best space is being absorbed and how little is left in core locations. In the City Core there is 1.1 years of Grade A supply and in Mayfair there is 0.7 years, both materially below long-held norms. That scarcity is shaping leasing behaviour, with earlier mandates, more pre-let activity and a growing premium for the best connected, high specification space.”
Availability declined for the third consecutive quarter to 26.28 million sq ft in Q4, down 5% on both the quarter and the year. Furthermore, Grade A availability faced a 9% reduction during the quarter to 16.56 million sq ft. As a result, the vacancy rate decreased to 8.82% overall and to 5.56% for Grade A.
There was 13.48 million sq ft under construction at year end, of which 37% is already pre-let. Despite several schemes that had been expected to complete in late 2025 now delivering in 2026, the near-term choice for occupiers seeking newly built or refurbished office space is tightening, particular in core submarkets where built and developed supply remains most constrained.
In Q4 the Wider City captured 60% of take-up (1.72 million sq ft), supported by commitments such as the combined 258,000 sq ft pre-let by Gibson Dunn and FTI at 1 Exchange Square. Availability in the Wider City decreased by 9% over the quarter to 12.89 million sq ft in Q4. Headline rents increased to £91 per sq ft in Q4 2025, up by 5% year-on-year.
The West End recorded 744,000 sq ft take up in the quarter, with Grade A comprising 80%. Prime headline rents in Mayfair and St James’s rose to £170 per sq ft, the sixth consecutive quarterly increase, driven by an undersupply of the best space. There is 6.12 million sq ft currently under construction and completing by 2028, with 41% already pre-let or under offer. Of this, 4.07 million sq ft is expected to deliver in 2026 – the highest expected completion volume on record, however over half is already pre-let.
East London posted its strongest quarter since 2019 with 418,000 sq ft of take up recorded, anchored by Visa’s 300,000 sq ft move to 1 Canada Square.
Investment activity strengthened in the final quarter of 2025 as buyers focused on assets with durable income profiles and demonstrable leasing depth. Central London transactions reached £3.31 billion in Q4 across 68 deals, bringing full‑year volumes to £9.76 billion, a 61% increase on 2024 and 1% above the five‑year annual average.
Larger deals returned with greater consistency, with 21 transactions over £100 million completing during the year, including 70 St Mary Axe, reflecting renewed engagement from capital seeking scale and long‑term stability in core London markets.
Prime office yields were unchanged in Q4 at 5.5% in the City and 3.75% in the West End. At year end, £4.19 billion of assets were available or at bids stage and a further £3.16 billion was under offer, pointing to an active pipeline of transactions early in 2026.
Chris Bennett, International Partner and Head of London Offices Capital Markets at Cushman & Wakefield, said: “Investors are concentrating on assets where the fundamentals truly stack up. The uplift in 2025 volumes shows that capital is not chasing momentum but is instead allocating to buildings with clear evidence of tenant demand, resilient income and credible rental growth. The return of larger transactions highlights a deeper conviction, and as the availability, flexibility and cost of the capital stack continues to improve this year, we can expect more investors to re‑engage with opportunities that meet the highest quality threshold.”
