Contents

• Across the City market

• Across the West End market

Across the City market

The City market recorded a significantly stronger third quarter, supported by the return of larger transactions and a sharp increase in pre-letting activity despite continued macroeconomic uncertainty. Q3 take-up reached 1.88 million sq ft across 89 transactions, 59% above Q3 2025 and 40% ahead of the five-year Q3 average. This brought take-up for the first nine months of 2026 to 4.46 million sq ft across 273 transactions, 3% above the equivalent period of 2025, 10% above the five-year average and 5% ahead of the long-term average. The largest transaction of the quarter, and the year so far, was Jane Street’s 465,000 sq ft pre-let at One Spitalfields, Bishops Square, E1 on a 20-year lease, with occupation expected in 2029.

The City Core remained the market’s most active submarket, accounting for 49% of take-up during the first three quarters. EC2 recorded the highest volume of activity, with 1.36 million sq ft transacting and accounting for 31% of total take-up. E1 experienced the strongest year-on-year growth, with 621,810 sq ft transacting, 226% above the same period of 2025, largely because of the Jane Street pre-let.

Activity during Q3 was increasingly driven by larger occupiers, with several substantial pre-lets and new leases completing. By contrast, the mid-sized segment continued to indicate a degree of occupier caution. Transactions between 10,000 and 25,000 sq ft totalled 1.13 million sq ft over the first nine months of the year, 6% below the five-year average, across 76 deals compared with 85 during the same period of 2025. Smaller occupiers maintained their momentum, however, with 961,165 sq ft transacting in sub-10,000 sq ft units, 9% above Q1–Q3 2025.

The continued prioritisation of newer, higher-quality accommodation resulted in a marked rebound in pre-letting activity. Pre-lets accounted for 41% of Q3 take-up, equivalent to 775,361 sq ft, compared with just 7% during the second quarter. Across the first nine months of 2026, pre-lets totalled 1.34 million sq ft and represented 30% of all take-up. This included Herbert Smith Freehills Kramer’s 268,000 sq ft pre-let at 1 Appold Street, EC2, BP’s 191,383 sq ft acquisition at The Ink Building, Timber Square, SE1, and Mishcon de Reya’s 161,000 sq ft pre-let at Mid City Place, 71 High Holborn, WC1. Further landmark transactions remain under offer, which should continue to support activity over the remainder of the year.

The Insurance & Financial Services sector was the largest source of take-up in each of the previous three years, accounting for 31% of leasing activity in 2023, 38% in 2024 and 34% in 2025. Activity during the first nine months of 2026 has been more evenly distributed, with Insurance & Financial Services and Tech & Media each accounting for 20% of take-up, closely followed by the Professional Services sector with 19%. This broader sectoral mix provides greater depth to the City’s demand base and reduces its reliance on the traditional financial and professional services sectors.

Active demand eased during Q3 after reaching a recent peak of 14.0 million sq ft in May. City and Central London active demand stood at 12.3 million sq ft at the end of September, 11% below the previous quarter but 9% above the corresponding period of 2025 and 56% ahead of the long-term average.

At the end of Q3, City supply stood at 9.5 million sq ft, equating to a vacancy rate of 7.0%. This was 40 basis points lower year on year and broadly unchanged from the previous quarter. Approximately 773,000 sq ft of space was added to supply across 58 buildings during Q3. Significant additions included The Delft, Minerva House, Montague Close, SE1, totalling 94,659 sq ft, 55 Mark Lane, EC3, totalling 90,289 sq ft, and 1 Old Jewry, EC2, totalling 66,796 sq ft.

The first nine months of 2026 delivered another strong period of rental growth, with a small number of trophy transactions continuing to boost headline averages. Prime rents reached £128.05 per sq ft, 24% above Q1–Q3 2025, while average Grade A rents increased by 13% to £82.33 per sq ft.

Development completions totalled 1.7 million sq ft across 13 schemes during the first nine months of 2026. Full-year delivery is forecast to reach 3.88 million sq ft, 11% above the 10-year average and ahead of the 2025 total. Of the remaining 2026 pipeline, 47% has already been pre-let, rising to 52% within the City Core. Notable Q3 completions included 1 Liverpool Street, EC2, totalling 175,909 sq ft, and 1 Golden Lane, EC1, totalling 106,892 sq ft.

Refurbishment continues to account for an increasing proportion of future delivery, representing 69% of the City schemes scheduled to complete between 2026 and 2030. This reflects the growing importance of repositioning existing stock to meet occupier expectations and emerging sustainability requirements, alongside the financial and practical challenges associated with delivering new-build schemes.

Overall space under construction stood at 9.2 million sq ft at the end of Q3, of which 29% had been pre-let. Although the volume of speculative construction demonstrates confidence in demand for best-in-class accommodation, development starts continued to slow. Approximately 1.3 million sq ft commenced across 12 schemes during the first nine months of the year, all of which were refurbishments. Persistent construction cost inflation, labour, increasing compliance requirements and geopolitical uncertainty continue to weigh on the viability and timing of development projects.

City Highlights

Across the West End market

West End take-up eased from Q2 but remained robust for the typically quieter summer quarter, reaching 0.93 million sq ft, up 18% on Q3 2025. This brought take-up for the first nine months to 3.14 million sq ft, 24% above the same period last year and 7% above the 10-year average.

In terms of transaction size, all size bands over 10,000 sq ft showed activity either in line with or above the 10-year average, with those at the larger end witnessing the greatest levels of resilience. For example, transactions over 25,000 sq ft were at the highest level since 2019. Mid-size transactions (10,000–25,000 sq ft) were also up on the 10-year average by a quarter. There continues to be subdued levels of demand for smaller acquisitions of space, where transactions under 10,000 sq ft remained 12% below the 10-year average. Occupiers of this size have also shown a strong preference for fitted space, with over three-quarters of sub-10,000 sq ft transactions being taken on a fitted basis.

The month’s largest transaction was SAFE AI’s pre-let of the 1st to 6th floors (83,317 sq ft) at The Reflector (Tribeca), NW1, building on the strong momentum in the Tech & Media sector, and the AI sub-sector in particular, seen in the first half of the year. Tech & Media sector occupiers have accounted for 38% of take-up, with the AI sub-sector alone making up a quarter of the West End’s total. Consequently, leasing activity has been concentrated in this sector’s traditional markets, with a combined 84% taking place in North of Oxford Street East, King’s Cross & Euston and Soho.

However, availability in the latter two markets has become increasingly constrained, with both holding c. 14 months of supply based on long-term average take-up. This may see Tech & Media demand spread more widely, towards North of Oxford Street East and other neighbouring markets.

The Insurance & Financial Services sector accounted for a further 21% of take-up, largely from Private Equity and Hedge Funds. Although take-up from the sector has moderated compared with last year, it remains 3% above the 10-year average. This sector has also shown greater resilience in smaller transaction levels than the market as a whole. Whilst the number of sub-10,000 sq ft transactions across all sectors was down by 12% compared to the 10-year average, the number completing to Financial Services firms was up by 8%.

Available supply across the West End fell for the fourth consecutive quarter to 8.29 million sq ft at the end of Q3, as a result of continued robust take-up levels, as well as delays to future pipeline schemes, and more secondary buildings securing consent for change of use. Overall, the vacancy rate now stands at the lowest levels since the end of Q1 2023, at 6.9%, down 60 bps quarter on quarter and 120 bps year on year.

The constrained development pipeline is set to remain a prevalent theme in the years ahead. Despite 2027 delivery levels expected to be at a similar level to 2026, around a quarter of this space is already pre-let. Completions are then set to fall sharply to 2.1 million sq ft in 2028 and only 0.9 million sq ft in 2029. With development starts also down 49% year on year at just 981,777 sq ft YTD, the prospect of limited new supply should continue to support strong prime rental growth going forward.

West End Highlights

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