In the South East, Q3 take-up reached 492,000 sq ft amid ongoing economic and political uncertainty, standing 42% below the same period in 2024. Q1–Q3 take-up stands at 2.02 million sq ft, and is expected to align with levels recorded over the past three years. Supply has fallen to a record low of 11.9 million sq ft, and with Prime availability expected to tighten further, it will drive rental growth. The increase in activity from larger occupiers is supporting the flight to quality in the market, which resulted in Grade A and Prime space accounting for 81% of take-up in Q1–Q3 2025.

Supply has declined by 15% since the end of 2023. While Prime and Grade A availability remains ahead of pre-pandemic levels, 2024 marked the first year that the supply of these assets fell. Supply of poorer quality stock is also being eroded through conversion to alternative uses. Indeed, with 60 million sq ft of stock now more than 20 years old, most supply can be considered in need of significant capital expenditure.

With the development pipeline at an all-time low, further rental growth is expected. Already in Q3, Chelmsford’s headline rent increased by 14% to £32.00 per sq ft, Farnborough saw rents rise to £35.00 per sq ft, and the Skechers letting in St Albans pushed the headline rent to £43.00 per sq ft. These rental uplifts reinforce the trend of occupiers being prepared to pay premium rents amidst the ongoing flight to quality and a lack of options across the market. The lack of new build development is also evident across the Big Six regional cities, where space is in short supply. The average rent difference between new builds and refurbished offices has halved since 2019, now standing at just £1.50 per sq ft, highlighting the growing value placed on well-executed refurbishments in good locations.

Whilst the above should support speculative office development, viability remains an issue. This, combined with the fact that new headline rents are being achieved in key regional cities and the yield spread between prime and secondary offices, means investors are increasingly looking to undertake refurbishments of core-plus buildings that are well-located. 84% of the upcoming office space in these markets over the next three years will come from refurbished buildings, a significant rise from 29% pre-Covid, reflecting a strategic shift to meet occupier expectations. They offer flexibility, faster delivery timelines, less below-ground risk, less planning risk, and the potential for lower whole life carbon (WLC) emissions.

Looking ahead, the success of the Big Six office markets will hinge on how effectively landlords can cope with the challenges in repositioning existing assets, such as inefficient floor plates, low ceiling heights, listed building restrictions, unknown structural capacity, deleterious materials, and a lack of relevant skills that push up construction costs. In a landscape where quality, ESG, and adaptability are paramount, refurbishment is no longer a fallback; it has become a strategic response to the evolving demands of modern occupiers and a direct answer to a stalled development pipeline.

_{Read the articles within Savills Build: Perspective report below}