Headline office rents increased across 10 South East and Greater London markets during the second quarter of 2026, according to the latest data from Knight Frank.
Office take-up totalled 620,292 sq ft during Q2, down 9.4% on the previous quarter and 21.2% on the same period in 2025. The largest transaction of the quarter saw 3M take 49,683 sq ft at 1050 Winnersh Triangle in Reading.
Total take-up in the first half of 2026 reached 1.3m sq ft, close to the five-year H1 average of approximately 1.4m sq ft. Active occupier requirements stood at 4.5m sq ft at the end of Q2.
Roddy Abram, head of South East and Greater London Offices at Knight Frank, said: “Leasing volumes have moderated from the particularly strong levels recorded last year, but the underlying occupier market remains active with businesses jostling for the best space in an undersupplied market. The headline vacancy rate also masks a market moving in two different directions. The South East is not short of offices overall, but it is increasingly short of the offices occupiers actually want.
“This is supporting rental growth in the best buildings while increasing the pressure on secondary stock. Owners of older offices without a credible route to meeting modern occupier requirements will increasingly need to invest, reposition or consider alternative uses. Developers who are delivering new stock to the market now are reaping the benefits by achieving record rents with little competition.”
Investment volumes remained subdued in H1 2026, although activity increased slightly during the second quarter and the forward pipeline points to improving liquidity.
A total of £248m of South East and Greater London offices traded during Q2, 3% more than in Q1 but 28% below the five-year quarterly average. H1 2026 investment volumes reached £488m, 8% below H1 2025 and 42% below the five-year average for the period.
The largest transaction was British Land’s £150m acquisition of Life Science REIT, increasing its exposure to science and technology assets across the London, Oxford and Cambridge “golden triangle”.
At the end of Q2, £440m of office assets had exchanged or were under offer with a further £551m being actively marketed. Prime yields for offices with 15-year income remained at approximately 7%.
Henry Wyld, partner, national offices capital markets at Knight Frank, said: “Investment volumes remain below historic levels, but there are early signs that liquidity is improving. Deal numbers are relatively close to longer-term norms, average lot sizes have increased and almost £1bn of office assets are now being marketed, under offer or exchanged. Capital remains available, but buyers are highly selective and focused on assets where the occupational fundamentals, pricing and business plans are viable.
“It is still too early to describe this as a broad recovery as macroeconomic uncertainty, cautious debt markets and the limited number of owners under pressure to sell will continue to constrain volumes. Nevertheless, the growing pipeline provides a credible basis for stronger activity during the second half as buyer and seller expectations move closer together.”
