Key takeaways

• The depth of demand across Central London has deepened, with active demand at 14.6m sq ft, and remains quality-driven

• Location-led decision-making has strengthened, reinforcing postcode loyalty and a core bias towards best-in-class space in preferred areas

• Higher costs and limited prime options are intensifying competition and driving more ‘stay vs go’ decisions

• The majority of occupiers are increasing their footprint, and this is translating into activity. In 2025, 61% of take-up was driven by occupiers expanding their office footprint

• Client poll indicates the impact of technology and AI is occupiers’ top concern over the next 12 to 24 months, ahead of talent retention

Occupier optimism holds despite cost pressures

Market sentiment remains positive, with active demand up 57% on the long-term average

So far this year, demand has been led by the Technology sector, with Tech & Media overtaking Insurance & Financial Services to account for the largest share of Q1 take-up for the first time in six years. This momentum is increasingly being driven by AI-focused occupiers, with a growing number transitioning from flexible office space to conventional leases as their businesses evolve.

Set against a backdrop of continued uncertainty, this reflects the resilient occupier confidence in the Central London office market, with active demand reaching a record high of 14.6m sq ft at the end of Q1, up 17% on Q4 and 57% above the 10-year average.

Alongside this, we saw Q1 take-up exceed the 10-year long-term average, with occupiers maintaining a strong preference for best-in-class space. While occupiers continue to navigate cost pressures, the prevailing sentiment is one of optimism, with expansionary intent and a clear focus on quality and location underpinning resilient demand throughout the market.

Our analysis of active occupier requirements over 10,000 sq ft – supported by insights from our recent Central London occupier client poll – indicates that expansionary intent continues to outweigh contraction. At present, our active demand analysis indicates 47% of occupiers are looking to expand, compared with 15% seeking to reduce their current office footprint.

This underlying trend has remained consistent over the past three years, with expansionary occupiers accounting for the largest share of demand (Chart 1). And this intention is translating into actual transactions, with 61% of space acquired (by sq ft) during 2025, representing occupiers relocating and increasing their footprint or acquiring additional space.

This momentum is expected to persist, with senior decision-makers indicating they are considering ways to encourage further increases in attendance, based on insights from our recent client poll and survey data.

Responses from the Savills Central London Workplace survey in 2025 revealed that 65% of C-suite executives and business owners believed their colleagues and teams are more productive in the office. This conviction is evidently shaping workplace policies, with a distinct preference for strategies that encourage office attendance by focusing on enhancing amenities and creating greater opportunities for collaboration, as also indicated by survey results.

Location-led demand reinforces core bias

Alongside the ‘flight to quality’, Central London occupiers have become increasingly location-focused. However, Savills Workplace Survey indicates that the definition of a good location has broadened beyond submarket or postcode and is now increasingly defined by more functional factors such as connectivity, amenity provision, and the quality and ease of the commuting experience. Core and more central locations are typically most sought after.

Notably, 84% of respondents ranked public transport connectivity and the financial cost of commuting among the top three factors they would consider as important when considering their ideal workplace.

This trend was even more pronounced among C-suite executive respondents. While they placed equal emphasis on building specification and location, they attached even greater importance to the financial cost of commuting (87%) and commute length (86%).

Commute length was ranked as the single most important factor respondents would change about their workplace, illustrating the importance of accessibility, ease of commute, and affordability on perceptions of an ideal location. We believe this now reflects the increased pressure on employees to spend more time in the office.

The survey also highlighted a ‘commute gap’, with 77% of respondents expressing a preference for a commute of under 45 minutes, yet only 52% currently have commute times within this threshold.

It also underscored the influence of the Elizabeth Line, which was ranked as the best line by 27% of respondents, nearly three times the share of the next closest line, illustrating the impact of new infrastructure on perceptions of location desirability (Chart 2).

Occupiers are still footloose, but mobility is declining

This intensified focus on location has resulted in occupiers becoming less footloose in the post-pandemic period.

We have analysed our leasing data over the past five years, focusing on office take-up above 10,000 sq ft.

The proportion of occupiers changing submarket or immediate postcode has declined by 10% to 55% in the five years following the pandemic, compared with the five years prior across Central London.

This is further evidenced by recent activity, with 54% of relocating occupiers in 2025 changing their submarket or immediate postcode, compared with 69% in 2019.

Search patterns have also narrowed, with only c.25% of requirements now spanning Central London, down from c.40% five years ago, reflecting a shift towards more targeted submarket searches. Requirements are increasingly focused on specific submarkets, particularly the West End or the City, rather than spanning the wider Central London market.

In addition, there have been fewer large relocations from the West End to the City, with eastward migration down by 8% compared with 2015–2019 levels, a period that concluded with record low supply in the West End. This decline has partly been driven by a convergence in City and West End headline rents. Excluding Mayfair and St James’s, the gap between best-in-class Grade A space in the West End and the City has narrowed from 14.6% in 2022 to just 4.3% in 2025.

On a sector basis, Tech & Media occupiers were the most footloose, typically relocating around twice the distance of Insurance & Financial Services firms when moving to a new market. By contrast, Insurance & Financial Service occupiers were the least mobile, moving the shortest distances when relocating within the same market (c.395 metres on average). This reflects a continued preference for specific City micro-locations, often in close proximity to key institutions such as the Bank of England and Lloyd’s.

A strengthening City Core bias

Overall, across the City between 2021 and 2025, 54% of relocating occupiers moved to a different postcode. This is below pre-Covid levels, where 65% changed postcode in 2015–2019.

However, the more notable shift is evident within the City Core. Here, postcode-changing relocations have fallen to 49% post-Covid, meaning that the balance has now tipped: the majority of relocating City Core occupiers are staying within the same postcode.

This reinforces a strengthening ‘core bias’, with relocations increasingly short and localised, particularly among Insurance & Financial Services occupiers, who remain the most anchored, with only 40% relocating to a different postcode.

Mayfair polarises, with ultra-prime retention and a value-led drift north

In the West End, occupiers were also less footloose overall, with the proportion moving submarkets decreasing from 67% in 2015–2019 to 59% in 2021–2025. More generally, there has been an increase in stickiness across centrally located and well-connected submarkets, while fringe markets suffered falls, although variation remains.

For example, despite Mayfair retaining a loyal tenant base of Financial Service occupiers and recording an increase in its retention rate post-Covid, overall retention remained at a relatively low level due to persistently tight levels of supply and high rental growth, particularly for prime space. This has driven many of these occupiers into neighbouring submarkets such as Fitzrovia and Marylebone, as well as Victoria, which all have some of the highest retention rates post-Covid at 60%.

However, the exception to this is Soho, which, similar to Mayfair, saw its retention rate improve post-Covid, but is still low at just 30%. This market absorbed the greatest number of occupiers relocating from Mayfair and St James’s between 2021 and 2025, leading to its vacancy rate declining from over 8% at the end of 2020 to under 4% at the end of 2025, and although it has since increased to 6.5%, over a quarter of supply is currently under offer.

This growth in demand in Soho has contributed to substantial prime rental growth, with average prime rents in Soho having risen by 27% over the past five years.

This has priced out the more traditional base of tenants in Soho, such as marketing, advertising and small Tech firms who are more price-sensitive. This is reflected in the West End-wide figures, with 63% of Tech & Media occupiers moving submarket over the last five years, and Retail & Leisure higher at 67%, making them the most footloose of the sectors.

‘Stay vs go’ and renewal-led demand offset

Alongside the continued focus on location, renewal activity has increased, with more occupiers choosing to remain in situ in response to higher rents, business rates and fit-out costs. Over the past five years, Central London has recorded average prime net effective rental growth of 6.1% per annum, reflecting sustained demand for premium office space.

This strong rental growth continued into the year, with the City’s average headline prime rent reaching a new record of £130.80 per sq ft, while the West End average stands at £165 per sq ft.

Against this backdrop, vacancy in core submarkets remains limited, with the City Core Q1 vacancy rate standing at 6.0% (110 bps below the 10-year average), Grade A tower vacancy at 2.9%, and West End Core (Mayfair/St James’s) vacancy at 4.3% (80 bps below its long-term average).

Constrained future supply is concentrating competition, particularly for larger requirements

At present, there are 31 active occupiers with requirements over 100,000 sq ft (excluding under offers), versus 24 Grade A options available now or in the next six months, with only three of these options located within the City Core and a further six across the West End’s Central submarkets (two of which are currently under offer).

Our analysis of active requirements reveals that occupiers weighing 'stay vs go’ decisions currently account for 4.7m sq ft, which represents 32% of overall demand.

Notably, the average requirement size for occupiers considering this option is 2.6 times larger than those not exploring such alternatives. This underlines both constrained supply and the emergence of material, large-scale demand (100,000 sq ft+), with the 10 largest active requirements alone totalling 3.7m sq ft.

Analysis of demand and completed transactions shows that the average lead time between launching a search and completing a lease event is 52 months for occupiers seeking over 100,000 sq ft.

Overall, 60% of occupiers with an active requirement are in buildings which have not been extensively refurbished or redeveloped in over a decade. 30% of active demand (4.5m sq ft) consists of occupiers who have been in occupation at their existing building for over 15 years, and a further 30% for over 10 years. Longer tenure typically increases the likelihood of relocation, as occupiers seek upgraded amenities and a more modern working environment, and, in parallel, relocations are driven by landlords withdrawing older stock to mitigate future obsolescence.

At the same time, the development pipeline remains constrained, with scheduled completions for the next four years down 10% on the Q4 estimate. This will further intensify competition for prime space and sustain rental growth.

More requirements are “in play”, but renewals acting as pressure valve on supply constraints

As a result of these factors, a growing share of requirements are effectively “in play” but may renew. At the end of 2025, Savills occupier retention & renewal tracker indicated occupier decisions to remain were at their second highest level since 2019, (behind only 2022), with recent large occupiers opting to extend at their existing premises, including Macquarie Bank at 25 Ropemaker Place (220,000 sq ft), Mayer Brown at 201 Bishopsgate (109,000 sq ft) and Rokos at 23 Savile Row (60,000 sq ft).

The rise in renewal activity only further underscores the resilience of demand across Central London, with occupiers remaining committed to maintaining a London office base.

Occupier Outlook

Supply constraints are likely to keep larger occupiers focused on renewals and pre-letting

Looking ahead, the near-term occupational outlook remains underpinned by the depth of demand and a continued preference for best-in-class space in core locations. With supply particularly for large, contiguous space constrained, larger occupiers face growing pressure to secure buildings that meet both location and quality requirements.

Where suitable relocation options are limited, this dynamic is likely to increase pre-letting and renewals activity for larger occupiers unable to secure desired space, with our renewal tracker indicating 100,000+ renewals in 2025 were at a post-Covid high.

Cost pressures are likely to keep smaller occupiers focused on flexibility

While smaller occupiers remain more sensitive to ongoing cost and economic uncertainty, evidenced by the 25% fall in sub -10,000 sq ft transactions recorded in Q1, (though largely outside the Financial Services sector), elevated fit-out costs and a desire to reduce upfront capital expenditure are expected to reinforce the existing shift towards greater flexibility and cost certainty, increasing the appeal of fitted and managed space with lower capex requirement.

The quantum of fitted and managed transactions across Central London increased by 22% year -on -in 2025, while year-to-date, 63% of all sub -10,000 sq ft space has been acquired on a fitted or managed basis.

Occupier Outlook

Strategic priorities are expected to outweigh short-term property considerations

Our recent Central London client poll, however, indicates that the outlook over the next 12 to 24 months will be shaped less by short-term real estate considerations and more by strategic business priorities.

When respondents were asked to rank the most pressing issues facing their organisations, the impact of technology and AI emerged as the leading concern, alongside elevated geopolitical uncertainty.

Analysis in Savills Spotlight: AI and European Offices: Separating Hype from Hiring Reality highlights that, despite increasing adoption, there remains only a weak correlation between AI uptake and growth in office-based employment, and AI is currently being deployed to enhance productivity rather than materially reduce headcount.

In a Central London context, office-based employment is forecast to grow by around 2.4% per annum over the next five years, with our analysis indicating c.39% of major Central London occupiers deploying AI within their business operations.

To date, the most tangible occupational impact of AI adoption in Central London has been a significant uplift in demand from the Technology sector. AI-focused occupiers now account for approximately 20% of Tech & Media sector active demand, with take-up in the sector already on track to reach a record level this year. Examples include Anthropic’s 158,000 sq ft acquisition at British Land’s 1 Triton Square, NW1; OpenAI at Nan Fung’s Jahan Court, Regent Quarter, N1 (88,500 sq ft); and Databricks at Network, Howland Street, W1 (134,483 sq ft).

Securing and retaining the best talent emerged as the second most pressing concern, reflecting the ongoing challenge of attracting skilled professionals in a competitive market. This priority reinforces the view that the workplace continues to be treated less as a purely operational and more as a strategic asset for supporting talent attraction, collaboration and productivity, particularly as organisations strive to adapt to rapid technological change.

By contrast, relocation of premises ranked third, suggesting that while it remains a consideration, it is less immediate than the challenges posed by technology adoption and talent retention. Encouraging employees back into the office sat in the mid-tier of concerns, indicating that although hybrid working strategies remain on the agenda, they are not viewed as critical when set against broader strategic priorities.

Collectively, these dynamics point to a market where demand remains firmly anchored to high-quality space in central locations, but where supply constraints and rising costs are increasingly limiting occupier choice. Whilst there is limited evidence of this to date, these pressures may begin to support increased occupier interest in well-connected fringe locations that offer a credible alternative at a more attractive cost.