London’s Office Market: Sky High Rents – but there’s a catch.
I spotted a great piece in the FT last Saturday by Joshua Oliver on the battle for London’s priciest office space. Here’s the short and snappy precis I’ve concocted for anyone who’s curious!
See www.ft.com for the full article. There is a pay wall but it is well worth a read.
London’s Office Market: Sky-High Rents and Fierce Competition – but there’s a catch.
Rents top £100 per sq ft at apex of market, but lower tiers continue to struggle
Forget Wall Street giants—Brazil’s Banco Master holds the record for London’s priciest office rent, shelling out £122 per sq ft for a top-floor spot at 22 Bishopsgate. That’s no fluke. Rents above £100 per sq ft were once rare, but in 2024, 17 leases crossed that threshold - more than in all previous years combined.
So, what’s driving these sky-high costs? A supply squeeze, premium perks, and the ongoing battle to lure employees back from the Work-From-Home ethic.
The New Arms Race: Ultra-Premium Amenities Galore
Landlords aren’t just offering desks; they’re selling an experience. At 22 Bishopsgate, tenants like Apple and law firm Skadden Arps enjoy a 400-seat event space, co-working hubs, and the UK’s highest gym - complete with a climbing wall. Need a bike tune-up? It’s free on Tuesdays. Fancy a bite? Gordon Ramsay’s got you covered with restaurants and a cookery school spanning the 55th to 61st floors.
Over at 40 Leadenhall, nicknamed "Gotham City," Kirkland & Ellis is moving into a tower packed with 17 terraces, a cinema, and three saunas. Even mid-rise buildings are in the game - Helical’ s building near Smithfield fetches £115 per sq ft, thanks to luxury changing rooms and Equinox gym style vibes.
Supply Crunch = Landlord Leverage
With few new towers on the horizon, landlords are in the driver’s seat. Construction slowed post-Covid, and only three major office buildings are set to be ready by 2027-2028. “
There’s a black hole of availability,” warns Knight Frank’s Katie Oliphant.
But it’s not all smooth sailing. London’s office vacancy rate hit a 20-year high of 10.5% in 2024, and as the economy wobbles, cost-conscious tenants may push back.
Case in point: Banco Master is reconsidering its pricey lease at 22 Bishopsgate.
Winners and Losers
Prime locations with top-tier perks will continue to command jaw-dropping rents. But older, outdated offices? Some may never be leased again. “That stock is obsolete,” says Savills’ James Evans. Expect conversions into something else—perhaps apartments, hotels, or even creative spaces.
For now, the battle for the best office spaces rages on, and in London’s skyline, it’s survival of the fittest (and flashiest).