Demand Normalises After Strong 2025 Finish
Leasing activity across Central London moderated during Q1 2026 following the exceptionally strong finish to 2025. Total take-up reached 2.5m sq ft, representing a 12.5% decline on the previous quarter and a sharper fall of 19.7% y-o-y, although activity remained broadly aligned with long-term market norms and close to the five-year quarterly average of 2.85m sq ft.
Activity during the quarter was underpinned by a number of larger requirements, with seven transactions completing above the 50,000 sq ft threshold. The largest lettings included BP’s pre-let of approximately 192,000 sq ft at The Ink Building, Timber Yard, SE1, alongside Gibson Dunn’s acquisition of 155,000 sq ft at 1 Exchange Square, EC2.
Media & Tech Leads Occupier Demand
Media & Tech emerged as the most active occupier group during Q1 2026, accounting for 23.5% of total take-up and approximately 578,000 sq ft, marking the sector’s strongest quarterly performance since 2021. Key transactions included Databricks Inc. securing circa 136,000 sq ft at The Network Building, Howland Street, W1, significantly expanding its Central London presence as part of continued UK workforce growth.
The Services sector ranked second with a 19.8% share of activity, largely supported by BP’s major commitment at The Ink Building, Timber Yard, while Banking & Finance represented 17.0% of quarterly take-up. Within the Banking & Finance sector, Pacific Life RE completed the sector’s largest transaction, pre-letting approximately 81,000 sq ft at 1 Exchange Square, EC2.
West End Momentum Builds
The City recorded a measured opening to the year, with take-up totalling 1.0m sq ft, down 15.8% q-o-q and marginally below the five-year quarterly average of 1.4m sq ft. Despite softer activity, the City remained the largest contributor to Central London leasing volumes, accounting for 41% of total take-up during Q1 2026.
In contrast, the West End experienced a stronger start to the year, with take-up rising to 0.8m sq ft, an increase of 27.1% on the previous quarter and 6.9% higher y-o-y. The submarket captured a 32.9% share of Central London activity, supported by four transactions above 25,000 sq ft.
Demand for premium workspace continues to dominate occupier requirements, with Grade A space accounting for 78.0% of all take-up during Q1 2026.
Sustained competition for high-quality accommodation has continued to drive rental growth, with prime City rents increasing 8.8% y-o-y to £92.50 psf, while the West End reached £175 psf, reflecting annual growth of 6.1%.
Supply Tightens as Vacancy Falls
Central London supply stood at 22.8m sq ft at the end of Q1 2026, representing a quarterly decline of 2.1% and a reduction of 10.8% compared with the same period last year. Total availability has now fallen below the five-year quarterly average of 24.6m sq ft. While headline supply levels appear relatively balanced, high-quality accommodation remains limited. Grade B stock continues to dominate overall availability, accounting for 73% of total supply across Central London, highlighting the ongoing shortage of Grade A space.
Vacancy trends continue to diverge across the capital as occupiers remain concentrated on core, well-connected locations. During Q1 2026, the overall Central London vacancy rate reduced to 8.4%, representing a quarterly fall of 23bps and remaining materially below the five-year average of 10.6%.
The West End retained the lowest vacancy profile across Central London, declining further to 6.8% in Q1 2026, comfortably below the five-year average of 7.5%. The City followed a similar trajectory, with vacancy reducing to 9.8%, also significantly below its long-term average of 13.4%.
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