From survival to strategy: London’s office sector finds its footing

London’s office market is showing renewed signs of life, with data from JLL and a string of headline-grabbing deals pointing to a clear uptick in both leasing and investment activity, as well as a wave of redevelopment reshaping the city’s workspace landscape.

Leasing rebounds as big deals return

Office leasing in the capital has rebounded sharply, according to JLL’s latest Central London Office Market Dynamics report. According to JLL’s data “take-up reached around 3.2 million sq ft in Q2 2025, the strongest second quarter since 2015”, driven largely by a return of larger transactions exceeding £100m. Overall, JJL state that cumulative investment activity in the office sector in the first half of 2025 has increased to “£4.5 billion, representing a significant improvement on H1 2024 (£2.8billion)”. 

JJL also highlight that limited supply of prime office space continued to drive rents upward. Nowhere is that clearer than at 8 Bishopsgate, where US law firm Proskauer Rose set a new record for City rents, agreeing a deal at £147 per sq ft (nearly double what it paid for its original space in the same tower just two years ago). The landmark transaction, reported by Bisnow, underscores the trend to a tightening prime market and occupiers’ willingness to pay top-tier rents for high-quality, energy-efficient space.

Investors return for big-ticket offices

London’s investment market is also regaining momentum. According to CoStar, there are now as many £100 million-plus office deals under offer as were completed in the whole of last year, a sign that institutional and overseas buyers are once again circling the capital’s core assets.

Among the trophy deals are Worship Square (circa £185 million), the Can of Ham office building at 70 St Mary Axe (around £340 million), and One Newman Street (roughly £250 million), all reportedly under offer.

Completed transactions are also picking up. Barings recently sold Capital House in the City to Japanese investor Daibiru for £169 million, again reflecting confidence in prime assets with strong sustainability credentials. The property had been upgraded to EPC B and WiredScore Platinum before sale, showing that green-certified buildings continue to command a premium.

The rise of the retrofit: rebuilding London’s workspace

Beyond leasing and investment, another strong uptake in the market is the redevelopment of tired office stock to either upgrade it into top-grade space or repurpose it entirely.

Aviva Investors recently issued a £37 million green loan to overhaul a West End office as part of a growing movement to retrofit rather than rebuild. The plan is to deliver a high-spec, energy-efficient workspace targeting best-in-class sustainability standards in an effort to help “the commercial real estate sector to get ready for the future, by funding the retrofitting and futureproofing of existing building stock”, balancing ESG pressures with constrained new-build supply.

Meanwhile, some owners are choosing a different path altogether. Firethorn has snapped up a City office site with the intention to convert it into a hotel, signalling growing appetite for mixed-use repositioning in areas where secondary office space struggles to compete.

While demand for office space is recovering, it is increasingly selective with a focus on quality, sustainability and experience rather than sheer quantity.

A market rebalancing around quality

Taken together, the recent uptick in leasing, investment, and redevelopment points to a market in transition from survival mode to strategic renewal.

Rents at the top end are breaking records, investors are rediscovering confidence in London’s prime office stock, and developers are moving to reposition older assets to meet occupier and carbon standards.

Yet the divide between prime and secondary assets remains. As JLL puts it, the “flight to quality” is now an established reality, and for London, that may be the key driver shaping its next phase of growth.

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