LPA: Central London offices outperforming global rivals

The office market in Central London has outperformed global rivals like New York, Paris, Berlin and Hong Kong across a range of metrics, according to the latest Global Cities Survey published by London Property Alliance (LPA).

Offices are the biggest driver of the capital’s robust performance, with the City and West End leading the pack with prime rental growth of 11.6% and 9% respectively. London’s vacancy rate of 6.6% is its lowest post pandemic, following a peak of 8.8% in 2023.

“Commercial development is one of London’s key growth drivers, continuing to attract global businesses and talent despite wider macroeconomic and geopolitical challenges”, said Charles Begley, Chief Executive, London Property Alliance. “Low vacancy rates in new office buildings suggest that the wider trend towards office-first work policies has supported central London’s economy at a time when national growth prospects are muted, and the diverse occupier base means that there is always appetite for best-in-class offices in the City and West End.”

Availability in prime City and West End developments is at near record lows; 1.1% and 0.3% respectively, according to Knight Frank. The fall in availability is in part due to a shortage of prime office stock, which has been exacerbated by a significant drop in major planning applications in central London over the past decade

This is in addition to an increase in demand from companies seeking to upgrade their corporate headquarters to support office-first workspace strategies. 

The survey, produced in partnership with independent think tank Centre for London, shows how best-in-class space has also been fuelled by growing business sectors, with the capital’s technology industry forecast to expand by 3.2% – behind only New York (3.6%).

London’s already established financial services industry is set to witness a 0.5% expansion this year, which is behind New York (3.3%) and Hong Kong (1.1%), but continues to outpace Paris and Berlin, both of which face no growth.

In comparison, office vacancy rates in New York’s Manhattan submarket are continuing to steadily increase from 11% five years ago to 23%, where it has remained over the past year. Hong Kong’s office vacancy levels have also more than doubled over the same period, currently sitting at 16%, with Berlin (10%) and Paris (7%) faring better.  

Despite macroeconomic headwinds and geopolitical uncertainty, London’s economy is forecast to grow 1.9% in 2025 compared to 1.6% last year, and more than double the 0.8% growth expected for the UK as a whole.  

For the first time the bi-annual survey also includes construction starts, reflecting the policy climate in the UK, where infrastructure and housing are central to the Labour Government’s plans for growth. The sector is projected to reach a three-year high in output in 2025, behind only New York.

“Central London is a vital engine of the national economy, and unlocking its full potential requires a clearer and more pragmatic planning framework that can drive job creation, infrastructure upgrades and sustainable development”, said Begley. “The Government must pull all the levers at its disposal to reinforce the capital’s global status as the commercial hub of choice for businesses and investors.”