Take-up across the South East and Greater London office markets rose to the highest first quarter total in Q1 2025 since 2008, according to new data from Knight Frank.
Leasing activity hit 1.2m sq ft, up 39% on Q4 2024, with 86% of the space taken being for Grade A buildings.
Key deals included BAE Systems taking 110,000 sq ft at Green Park in Reading and technology firm ARM pre-letting the entirety of British Land’s 95,000 sq ft Optic building at Peterhouse Technology Park in Cambridge (pictured).
At the end of Q1 2025, there was 11.8m sq ft of Grade A space available across the region, but the development pipeline remains limited with just over 1.8m sq ft of speculative office space under construction, two thirds of which is located in West London and Cambridge.
Knight Frank estimates there are 5.2m sq ft of current active requirements and 13.6m sq ft of lease events due to occur over the next three years.
Office investment transactions totalling £259m completed in Q1 2025. The average deal size for the quarter was £10.3m.
Roddy Abram, head of South East and Greater London offices at Knight Frank, said: “The region’s best business parks that have invested in delivering high quality office stock with strong amenity provision continue to perform strongly. Occupier appetite to upgrade their headquarters ahead of lease events remains robust.
“Landlords bringing new or refurbished offices into undersupplied markets are often able to command higher rents compared to historic levels, with certain markets witnessing double digit growth year on year. The development pipeline uncertainty beyond 2027 means that large pre-lets will continue to characterise the market, given availability shortage in buildings already completed.”
Simon Rickards, head of national offices capital markets at Knight Frank, added: “Investors are slowly buying into the demand and prime rental growth story in new office buildings, which continue to attract blue-chip tenants on strong lease terms. Investment activity continues to hinge on pricing confidence and although prime office values have already bottomed out, the lack of motivated sellers means that deal volumes remain subdued. However, property companies are increasingly recognising the current window of opportunity and many are eyeing value add deals given larger upside potential because of depressed values and shortage of modern office stock.”
