Take-Up Bolstered by Impressive Pre-Lets
Q1 2025 experienced an increase in take-up across Central London, following a marginally quieter finish to 2024. Take-up totalled 3.11m sq ft, reflecting a 3.7% increase in activity quarter-on-quarter and a notable uptick of 27.5% when compared with Q1 2024 whilst remaining above the five-year quarterly average of 2.45m sq ft.
The strong take-up performance in Q1 can be attributed to nine deals over 50K sq ft. Simmons & Simmons securing a 154,000 sq ft pre-let at 25 Finsbury Circus EC2, and McDermott Will & Emery pre-letting 110,000 sq ft at 63 New Bond Street, W1 were the largest deals during the quarter.
Professional Services remains a prominent tenant sector, accounting for the largest share of take-up in Q1 2025 at 24.6%, totalling c.762K sq ft. Notable deals within the sector include, AlixPartners signing for 90,000 sq ft at 1 Millennium Bridge, EC4. AlixPartners are relocating from 6 New Street Square, EC4, where they have been based since 2016. Banking & Finance accounted for the second largest share at 22.4%, with Octopus signing for c.91K sq ft at 20 Giltspur Street, EC1, the largest deal of the quarter for the sector.
The City saw an impressive start to 2025, reaching 1.54m sq ft of take-up, an increase of 25.6% quarter-on-quarter, remaining securely above the five-year quarterly average of 1.19m sq ft. Remaining the most dominant market in terms of activity, the City was responsible for 49.6% of Central London take-up during Q1 2025. The West End saw a marginal drop in take-up to start the year, totalling c.774k sq ft, a quarter-on-quarter decrease of 11.4%, but a strong year-on-year increase of 73.9%. Market share for the West End was 24.9%, boosted by three deals over 50K sq ft.
“Strong pre-let activity and persistent demand are driving fierce competition for best-in-class space across Central London, highlighting a market where high-quality supply is quickly absorbed, keeping Grade-A availability at record lows.”
Demand Continues to Outstrip Supply
Occupier demand for best-in-class space is showing no sign of easing, with Grade A space accounting for 69.3% of total take-up during Q1 2025. Along with these levels of demand, prime rents continue on an upward trajectory, , with the City seeing an annual increase of 9.68% to £85 psf, and the West End reaching £160 psf, an annual increase of 3.2%.
Supply in Central London was 25.60m sq ft at the close of Q1 2025, reflecting a drop quarter-on-quarter of 9.2%, and down 6.4% on Q1 2024 levels, and moving closer towards the five-year quarterly average of 24.0m sq ft.
The lack of available Grade-A office space continues to be an issue for occupiers, with Grade-B office space accounting for 72.2% of supply across Central London. A lack of Grade-A supply is creating vacancy rates as low as 1.6% in the West End, and 2.97% in the City for best-in-class space.
Vacancy continues to spread in range across Central London, as occupiers remain focused on core markets. During Q1 2025, the Central London average vacancy decreased to 8.91%, a reduction of 26bps quarter-on-quarter, and significantly below the five-year average of 9.96%.
The West End remains the market with the lowest vacancy across Central London, dropping to 7.01% in Q1 2025, marginally below the five-year average of 7.20%. The City following a similar suit, saw a reduction of vacancy to 9.53%, also below the five-year average of 11.87%.
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