London’s office market picked up pace in Q2 2026
London’s office market bounced back a bit in Q2 2026 after a slow start to the year. Take-up increased across all sources we monitor, availability dropped to its lowest since 2022, and AI companies became the main occupier story for the first half of the year.
The West End had its best quarter in over two years, thanks to activity in Euston, King’s Cross, Fitzrovia, Soho, Covent Garden, and Victoria. The City had less volume, but demand for Grade A space stayed strong and prime rents kept rising.
Here’s a look at the key London office market numbers for Q2 2026 and what they mean for businesses planning their next steps.
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– Key London market stats »
– London Office Rents & Rates Trends »
– Notable Q2 London office deals »
– SHB client results & sectors we moved »
Q2 2026 saw the market rebound
Led by AI, a strong recovery in the West End, tighter availability and ongoing growth in prime rents
High-level stats across Central London offices
• Average take-up: 2.87m ↑ from 2.2m sq ft in Q1
• Average vacancy rate: 7.6% (blended avg) ↑ from 7.1% in Q1
• Availability: 20.13m sq ft
• New/refurbished vacancy rate: 1.2-1.6%* stable from 1.2% in Q1
• Active demand: 14.3m sq ft ↓ slightly from last quarter’s 10 year high
• City average prime rent YoY: £101.67 psf blended rate across sources ↑ 4.9%
Take-up rebounds as AI occupiers drive big deals
Central London take-up averaged 2.87 million sq ft in Q2 2026, up 19% from Q1 and above the long-term average. The West End led the way, with take-up jumping 55% from the previous quarter to 1.25 million sq ft, its best result in over two years.
Grade A space remained the top choice, making up 76% of all leasing in Central London in Q2, up from 74% in 2025 and much higher than the ten-year average of 62%. Secondary space is still under pressure, with Grade B and secondhand space making up only 12% of the market.
The main story in Q2 was AI. Technology and AI companies took 19% of all space, with Anthropic and OpenAI behind two of the four biggest deals. In the first half of 2026, AI take-up reached 705,371 sq ft, more than double the 2025 total of about 318,000 sq ft. King’s Cross, Euston, and Fitzrovia are becoming AI clusters, joining established hubs in Soho and Covent Garden.
Pre-letting slowed in Q2, making up only 7% of take-up compared to the long-term average of 22%, as occupiers took recently finished space. This is a short-term shift, not a lasting change in demand. A strong pipeline of deals under offer should support activity in the second half of the year.
What this means
Take-up is picking up, and AI companies are changing where demand is focused in London. For businesses planning a move or renewal in 2027 or 2028, quality space supply is shrinking and it takes longer to secure. The companies getting the best results started their searches early and used data to guide their decisions.
Vacancy edges up – core locations tighten further
The blended Central London vacancy rate for Q2 2026 is 7.6% as an average of quoted figures from the latest reporting. Different market boundaries account for most of the variation between sources.
Within that headline, the picture varies significantly by location. King’s Cross and Euston recorded a vacancy rate of just 3.0%, the lowest of any Central London submarket. The West End Core stood at 5.8% and the City Core at 6.1%. At the other end, Stratford recorded 24.6%, Vauxhall and Battersea 17.5%, and White City 17.9%.
The West End saw vacancy fall to a 3.5-year low of 7.2% in Q2, with just 124,000 sq ft of Grade A space available across the core submarkets of Mayfair, St James’s and Soho combined. Only three schemes in the West End Core have capacity for requirements above 10,000 sq ft.
New and refurbished vacancy across core Central London submarkets averaged 4.15% on Knight Frank’s submarket data (Stratford noted separately at 18.0% due to structural fringe oversupply). Colliers recorded new Grade A vacancy at 1.6%, the fifth consecutive quarter of decline.
What this means
The headline vacancy rate is just a starting point. For businesses looking in core Central London, the real availability of Grade A space is much lower than the blended numbers suggest. To know what is truly available for your size, location, and timing, you need detailed submarket information. Relying only on a general market overview means you might overestimate your options.
Stock dips to lowest level since 2022
Total availability across Central London averaged 20.13 million sq ft at the end of Q2, down 6% quarter-on-quarter on CBRE’s measure and back to the ten-year quarterly average for the first time since 2022. Colliers recorded availability at 19.4 million sq ft, its lowest since Q1 2021.
The fall was broad-based. All five main Central London submarkets recorded a reduction in Q2. The City and Midtown saw the largest falls, each down 8% quarter-on-quarter. Secondhand space declined 6%, newly completed space fell 9%, and early-marketed space remained broadly stable.
Development completions totalled 1.6 million sq ft in Q2, with 67% pre-leased before practical completion. Just 240,000 sq ft of new speculative space came to market in Q2. In the City, fewer than three units can currently accommodate requirements above 350,000 sq ft.
With 3.7 to 4.1 million sq ft under offer at the end of Q2, the pipeline for H2 leasing is healthy. A strong under-offer book entering the second half supports confidence in near-term take-up levels, even as new supply reaching the market remains constrained.
What this means
Availability is shrinking quickly, and most quality space is already committed. Businesses looking only at open-market listings are not seeing the full picture. The best options are often found through off-market and pre-market information, especially for needs between 10,000 and 50,000 sq ft in core areas.
City prime rents reach £101.67psf. West End Core £185 psf
The blended City average prime rent reached £101.67 per sq ft in Q2 2026, averaging available sources at the time of publishing. This is a growth of 4.9% year-on-year on the Central London average prime measure, according to published reports.
In the West End, the average prime rent reached £111.60 per sq ft, up 5.3% year-on-year. Mayfair and St James’s both moved to £180 per sq ft, with growth of over 7% quarter-on-quarter in both submarkets. Some recorded the West End Core prime rent at £185 per sq ft.
Reports indicate that City prime rents on mid-floor space above 10,000 sq ft are expected to surpass £100 per sq ft in Q3 2026, reflecting the acute shortage of quality City stock.
Rent-free periods remain broadly stable. City Core lettings are seeing 9 to 12 months rent-free on a five-year term and 21 to 24 months on a ten-year term. Docklands continues to offer the most generous incentive packages, with 13 to 15 months on a five-year term and 26 to 30 months on a ten-year term.
What this means
City prime rents are up 4.9% year-on-year, and West End Core rents have reached £185 per sq ft. This shows that the best buildings are truly scarce, and landlords are aware of it.
If your lease is coming up, start by comparing your current costs to what the market offers, including rent-free periods and landlord incentives. Our TERA platform lets you see your lease position clearly using live market data before you start negotiating.
For a breakdown of rents and business rates across London’s submarkets and office types, see our guide below ↓
Notable Q2 2026 London office deals
The biggest deals in Q2 2026 were led by AI companies and financial services, with the West End clearly the top choice for growing technology businesses expanding in London.
Anthropic’s commitment to 158,500 sq ft at 1 Triton Square, NW1 was the largest West End deal of the quarter, reinforcing the Euston and King’s Cross area as the anchor for AI and technology occupiers in London. OpenAI’s pre-let at Jahn Court, 34 York Way placed the company at the centre of the same emerging knowledge cluster, alongside established AI-related occupiers in Fitzrovia and Soho.
JP Morgan Chase’s acquisition at 1 Cabot Square reinforces the Docklands’ position as the destination for large-format financial services occupiers, while Barclays’ £750 million purchase of One Churchill Place, E14 as an owner-occupier was the investment story of the quarter.
→ Anthropic | 158,500 sq ft | 1 Triton Square, NW1 | West End | £97.50 psf
→ JP Morgan Chase | 96,100 sq ft | 1 Cabot Square, E14 | Docklands | Owner-occupier
→ OpenAI | 95,500 sq ft | Jahn Court, 34 York Way, N1 | King’s Cross | Pre-let £97.00 psf
→ Natixis Bank | 88,500 sq ft | Thames Court, 1 Queenhithe, EC4 | City
→ United Talent Agency | 68,000 sq ft | One Rathbone Square, W1 | West End
Q2 2026 SHB client results
Money saved & sq ft exchanged
£ saved for clients this year
Projects completed
£ saved for clients in Q2 2026
Sq ft of offices acquired
Shifts in service mix and market needs
The biggest change is the growth in advisory and consultancy work. Other Professional Services rose to 20% of revenue, Building Consultancy to 11% and Disposals to 7%. Along with Serviced at 36%, more than two-thirds of Q2 revenue came from advisory, consultancy and flexible office work instead of direct acquisitions.
When it is hard to find new Grade A space in core areas and prime rents are rising by 4.9% year-on-year, occupiers start asking different questions. Instead of just looking for a new building, they want to know if their current space still works, if their lease terms are competitive, if their fit-out needs updating and if their rates have been properly reviewed.
Lease Advisory’s share dropped from 39% in Q1 to 11% in Q2 because Q1 had an unusually high number of renewals. The demand for lease advisory services has not gone away; it has just moved into the pipeline for the second half of 2026 as more occupiers get closer to their renewal dates and Stay v Go strategies are taking more time.
For occupiers, the best conversation with an adviser is not just about what is available in the market. It is about understanding your current costs, your options and what the best outcome looks like across all areas, including lease terms, fit-out, rates and any extra space.
Sectors we found offices for in Q2 2026
Tech & IT led our Q2 deals at 28%, reflecting the broader AI and technology surge in the market. Property & Construction followed at 18%, with Media & Creative at 11%.
Tech & IT returning to the top spot at 28% matches the wider market trend. AI and technology occupiers are now the main drivers of demand in Central London, which saw this sector taking the lead in our transaction charts again.
Office market outlook for Q3 2026
Q2 2026 showed that London’s office market is recovering, with AI demand changing where activity is focused and availability tightening in every core submarket.
With 3.7 to 4.1 million sq ft under offer at the end of Q2, H2 2026 leasing has a strong pipeline to convert. Financial services and AI-related occupiers are expected to continue leading activity, and the West End’s momentum heading into the summer looks well supported.
The market is still split into distinct segments
Let’s see where your space sits in the market
If your lease event is in 2027 or 2028, now is the time to act. For those with renewals now, the advice you need has changed significantly.
In both cases, the first step is the same.
Speak to the team +44 020 3514 8867 or fill in the form below to ask any questions.
Market commentary references published Q2 2026 reports. Vacancy and availability figures are blended averages from our research and insights and various sources, which differ due to respective market boundary definitions. New/refurb vacancy blended average excludes Stratford (18.0%) as a fringe outlier. All figures reference Q2 2026 (April to June 2026) unless otherwise stated.
