Prime headline office rents in Central London increased by an average of 0.2% during Q2 2026 compared with 0.8% in Q1, according to the latest Carter Jonas Central London Net Effective Rents Monitor.
Net effective rents – which take account of both headline rents and rent-free periods – performed slightly more strongly, increasing by 0.3% on both five- and 10-year leases.
On an annual basis, prime headline rents increased by 1.5%, while five- and 10-year net effective rents rose by 1.6%. This represents the slowest rate of annual rental growth since Q3 2022.
The City of London was the only Central London submarket to record quarterly headline rental growth in Q2, with prime rents increasing by 0.6%.
Michael Pain, partner and head of tenant representation team at Carter Jonas, said: “The second quarter of 2026 provides evidence that the Central London office market is entering a more measured phase of rental growth, but the underlying fundamentals remain robust. Rental growth is increasingly concentrated in the locations and buildings where occupiers are competing most strongly for high-quality space. Mayfair and St James’s in the West End and the banking and insurance district in the City are prime examples of this trend.
“Canary Wharf is also undergoing a renaissance following a string of recent high-profile transactions – with the financial services sector being the main driver – as large space occupiers struggle to find operationally suitable space that falls within budget in the more central business districts. The widening cost gap between Canary Wharf and the more central business districts is becoming an increasingly important consideration for occupiers requiring large floorplates.
“Although the pace of growth has moderated, this should not be interpreted as a weakening of the market. The fundamental issue remains one of supply. Much of the new Grade A space coming forward is already committed before completion, while the development pipeline becomes increasingly constrained as we head towards the end of the decade. Against this backdrop, we expect competition for the best buildings and locations to remain robust, with the highest rates of rental growth likely to be focussed where demand is strongest and supply is most restricted – the City and West End cores.”
