FMJ Facilities Management magazine providing industry-specific intelligence to FM and property professionals
Despite a slowdown in leasing volumes, the Central London office market is showing signs of quiet resilience and evolving demand, according to tenant-only real estate advisor, Devono.
Devono’s newly released Q1 2025 Central London Office Market Snapshot reveals that while total office leasing dropped 31 per cent quarter-on-quarter to 2.9 million sq ft, activity remains above pre-pandemic norms, with deal volumes still 12 per cent above the long-term quarterly average. The report points to strategic early leasing, growth in financial and legal sector activity, and a surge in demand for super-prime and flexible spaces as the building blocks of a likely rebound in the second half of 2025.
Shaun Dawson, Head of Insights at Devono said: “There’s a narrative beneath the headlines: businesses aren’t backing away, they’re choosing carefully. The office is evolving, not disappearing.”
Key insights from the report include:
- LEASING ACTIVITY
The City’s Prowess: The City of London claimed nearly half (47 per cent) of all leasing activity, buoyed by a wave of demand for quality Grade A and secondhand space.
Mega Deals Return: Two high-profile legal sector leases over 100,000 sq ft signal renewed confidence among larger occupiers.
Early Leasing Activity Still Strong: 600,000 sq ft was let before development completion in Q1 2025, above the short-term average of 496,000 sq ft.
Sector Trends – Finance Leads, Legal Surges, Professionals Deliver: Finance topped leasing activity for the third straight quarter. Legal made a comeback with its best quarter since Q3 2023, while professional services signed the most deals overall.
The report’s author Mark James, Research Analyst at Devono stated: “Given the multitude of headwinds businesses faced at the end of 2024 and start of 2025, a drop in leasing volumes comes as little surprise. However, this masks the underlying resilience of central London’s occupier market, with transaction numbers remaining comparatively robust. Landlords’ confidence in pushing rents upward throughout Q1 further underscores an expectation that more substantial leasing activity will return as the year progresses.”
- RENTS & AVAILABILITY
Availability Tightens, But Remains Elevated: Office availability across Central London fell by three per cent in Q1 2025 to 24.4 million sq ft—the lowest level since 2023.
Grade A Availability Is High but Choice Is Tight: 7.6M sq ft of Grade A stock exists across Central London, well above the 10-year average, but real choice is shrinking.
Grade B Rent Growth Outpaced Grade A: Average Grade B rents grew four per cent, with some locations like the City seeing increases of up to 11 per cent.
Mayfair Hits £250 psf: Super-prime rents in Mayfair surged to a new high, reflecting intense competition for elite locations.
- FLEXIBLE OFFICES
Flexible Offices Enter the Mainstream: Flex offices are no longer a stopgap—they’re a core strategy.
Extended flex commitments: Businesses are now staying in flexible offices for over 24 months, signalling increased confidence in serviced and managed models.
Flexible Pricing Shift: Average Grade A flexible office costs rose to £871 per desk/month, with 13 business districts now commanding over £1,000 for premium space. Top-end pricing reached £1,800 pdpm in Mayfair–St James’s.
Andy James, Head of Flexible Office Solutions at Devono commented: “Flex isn’t just filling the gap between leases, it’s reshaping how companies approach their entire workplace strategy. We’re seeing larger occupiers embrace flexible solutions as part of long-term planning, not just short-term reaction.”
OUTLOOK
Devono anticipates a rebound in leasing activity in Q2 and beyond, with pent-up demand and refined real estate strategies driving decisions. Flexible workspaces, once seen as temporary, are now permanent fixtures in the occupier playbook, reflecting a more dynamic, employee-centric, and cost-sensitive market. The report suggests that while Q1 saw firms “pause for breath,” many are now re-entering the market with greater clarity, and an appetite for high-quality, future-fit workspaces. “The demand is there, but it’s more selective, more strategic,” said Dawson. “The second half of the year is primed for a bounce.”
To download the full report click here.
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