New research from BNP Paribas Real Estate has revealed that 75% of available office space across Central London is Grade B, reinforcing the urgent need for investment in upgrades to meet occupier expectations who increasingly seek Grade A space.
Key Market Findings:
- 75% of available Central London office supply in Q4 2024 was Grade B, highlighting the massive disparity with Grade A stock accounting for 25% of available space.
Grade B accounted for circa 21m sq ft of Central London vacant stock, with Grade A at 7m sq ft. - Q4 2024 Central London Grade B take-up accounted for 24.8% at around 757,000 sq ft with year-end volumes at 26.4% (2.8m sq ft).
- West End Grade B available supply in Q4 stood at 5.4m sq ft, equating to 77.1% of vacant stock in that market.
- City Grade B available supply stood in Q4 stood at 8.2m sq ft, equating to 72.4% of vacant stock in that market.
Central London
Mhairi Thomson, Central London Office Leasing Research at BNP Paribas Real Estate, commented: “Central London’s office market has a serious Grade B problem. If landlords don’t upgrade now, they risk potentially never being able to lease their space. In the occupational race occupiers are moving fast, and the market continues to split between best-in-class space and everything else.
“The data speaks for itself. The City and West End remain dominant, but Midtown and Southbank are attracting more interest as tenants seek top-tier space at competitive rates. City & West End have little to no Grade A space 2.8% and 1.6% respectively and tenants will need to find it elsewhere.
“This year’s development pipeline could lead to a short-term increase in vacancy, but given the sustained demand for high-quality space, well positioned Grade A offices will remain highly competitive. The challenge for landlords with Grade B stock is to either invest in refurbishment, convert, or risk obsolescence.
“London’s office sector must play a crucial role in achieving our climate goals. Yet, a lack of clear direction on future energy efficiency standards leaves owners and investors hesitant. While we acknowledge some improvements in the energy performance of London offices, the pace is far too slow. To realistically achieve a widespread EPC B rating across London’s office stock by the early 2030s, we urgently need government to provide clarity and a consistent roadmap.”
West End
Simon Knights, Head of West End Agency at BNP Paribas Real Estate commented: “The West End is ripping it up. Prime rents are smashing records across all neighbourhoods. The supply squeeze is suffocating, and whilst Grade A is thriving, Grade B demand is slim to none.
“For landlords sitting on Grade B office stock, the message is clear. There is virtually no market, and unless significant investment is made, these buildings will remain empty. One Cavendish Place is an example which stands out where a targeted refurbishment of the top three floors has saw asking rents rise to around £150 per sq ft. There is rental growth to be achieved – but only for those willing to take decisive action.
Your best bet if you aren’t willing to spend would be to alternative uses such as conversion to residential, or hospitality where the market is strong across Mayfair and the surrounding thoroughfare. “In this market, if your building isn’t top notch, you’re toast. The West End is no place for the slow or faint-hearted and that goes for the agents. Anyone can do deals. Not everyone can give good advice.”
City
James Strevens, Head of City Leasing at BNP Paribas Real Estate, added: “The City’s office leasing market has started 2025 much as it ended 2024 with steady levels of activity. Best-in-class Core Grade A stock continues to dominate, while Grade B space remains a mixed picture. There are some signs of a growing emphasis on value, leading to more activity on good quality buildings in fringe and peripheral locations, but it’s all relative. For poorer quality Grade B space, generating inspections and occupier interest remains a challenge.
“However, some signs of increased cost-consciousness among occupiers, there’s no clear evidence of tenants prioritising Grade B purely for value. Fundamentals still matter with good floorplates, solid building infrastructure and strong levels of amenity being key to attracting interest. In terms of rents, Grade B space in the City Core typically commands between £55-£65 per sq ft, while peripheral locations are achieving rents in the range of £45- £55 per sq ft.
“Whilst there is some evidence that the market may be moving towards a recalibration of what constitutes lettable Grade B space, location, and the quality of the building and floorplate, even if it lacks premium finishes and amenities, remains paramount. No matter how attractively priced, the evidence suggests that poorer quality Grade B stock in weaker areas will continue to struggle.”
