The amount of central London office space under offer has reached its highest level since 2007, according to agents’ second-quarter figures, signalling that large occupiers are committing to the capital again. For smaller businesses, the rebound brings a tighter market for the best buildings, firmer prime rents and a stronger case for planning searches well ahead of a lease event.
In short: demand is concentrated on high-quality, well-located space, and that is where availability is shrinking fastest. Occupiers needing a few thousand square feet still have options, but the gap between prime and secondary stock is widening.
What the latest figures show
Cushman & Wakefield’s central London Marketbeat for Q2 2026 recorded 4.44 million sq ft of office space under offer, a 51% rise on the previous quarter and the highest total since 2007, as reported by Property Investor Today. Completed take-up reached 2.46 million sq ft, broadly in line with the five-year average, and 77% of leasing activity was in Grade A space.
Other agencies measure the market differently, but the direction is consistent. Knight Frank’s London Offices Spotlight for Q2 2026 put London take-up at 3.1 million sq ft, space under offer at 3.7 million sq ft and active requirements at 14.3 million sq ft, against an overall vacancy rate of 8.0%.
Space “under offer” refers to deals agreed in principle but not yet signed. It is a forward indicator rather than a guarantee, but a high figure usually translates into completed lettings over the following quarters.
Who is driving demand
Much of the under-offer total reflects large requirements in the wider City and Canary Wharf, with several major occupiers in lease negotiations. Cushman & Wakefield’s head of London offices leasing, James Campbell, said the volume showed occupier confidence, adding that businesses were taking longer to decide but were still choosing London.
Technology is a notable source of activity. Cushman & Wakefield attributed 25% of first-half take-up to the tech sector, with AI businesses accounting for nearly 60% of that. In the West End, Savills’ Central London Office Market Watch found AI companies took 27% of first-half space, and deals above 25,000 sq ft reached their highest level since 2007.
Flight to quality and the Grade A squeeze
The concentration of demand on the best buildings is the defining feature of the cycle. Savills reported City vacancy of 7.0% overall, but just 1.9% for Grade A tower space, with City Core vacancy of 5.9% — well below its ten-year average. In the West End, vacancy fell for a third consecutive quarter to 7.5%.
Knight Frank’s figures show the same split: vacancy for new or refurbished space stood at 5.3% in the West End and 6.2% in the City and Southbank, lower than the overall rates for each area.
New supply is not expected to close the gap quickly. CoStar data reported by City AM showed London office construction starts running 57% below the ten-year average in the second quarter, with CoStar’s Patrick Scanlon expecting the decline in construction to accelerate in the second half of the year.
Rents and incentives
Prime rents are responding. Savills recorded a City prime rent of £116.73 per sq ft, up 19% year on year, and an average Grade A City rent of £76.21 per sq ft. Knight Frank quoted prime headline rents of £185 per sq ft in the West End Core and £62.50 in Canary Wharf, while noting rent-free periods of 24 to 27 months across most sub-markets. Headline rents therefore tell only part of the story; incentives remain significant on longer leases.
Where SMEs fit in
Smaller occupiers are not the main force behind the headline figures, but they are active. Savills found City deals below 10,000 sq ft totalled almost 680,000 sq ft in the first half, up 9% year on year, although equivalent West End activity was 18% below its ten-year average.
Flexible space remains an important route for growing firms. WIN data reported by Allwork.Space put London flexible workspace occupancy at 83.8% at the end of Q1 2026, with the West End and City Core above 87%, suggesting that serviced options in prime areas are also filling up.
Practical points for SMEs reviewing their space include:
- Starting searches 12 to 18 months before a lease expiry or break, given longer decision times across the market.
- Comparing net effective rents, after rent-free periods and fit-out contributions, rather than headline figures alone.
- Considering refurbished buildings, City Fringe or Docklands locations, where vacancy is higher and terms may be more negotiable.
- Checking a building’s EPC rating, as energy efficiency rules for larger rented buildings are due to tighten from 2031.
- Weighing flexible or managed space against a conventional lease where headcount is uncertain.
What it means for London occupiers
The record under-offer figure points to a market where competition for the best space will intensify through 2027, while secondary buildings continue to struggle for tenants. For SMEs, that means earlier planning, careful comparison of total occupancy costs and openness to alternative locations. Lease commitments are long-term liabilities, so businesses should take advice from a qualified surveyor or solicitor before signing.
Frequently asked questions
How much London office space is under offer?
Cushman & Wakefield recorded 4.44 million sq ft under offer in central London at the end of Q2 2026, the highest since 2007. Knight Frank’s measure for London stood at 3.7 million sq ft.
Are London office rents rising?
Prime rents are. Savills reported City prime rents up 19% year on year in Q2 2026, although generous rent-free periods remain common.
Is there still office space available for small businesses?
Yes. Overall vacancy is around 7–8% in the main sub-markets, and small City lettings rose in the first half of 2026, but the best Grade A and flexible space is increasingly scarce.