Global serviced office market grows by 18% globally – can London keep up?

A recent report has revealed that the serviced office market has seen phenomenal growth in the last 12 months, with projected market value up from $38.32 billion (£28.5 billion) in 2024 to $45.08 billion (£33.5 billion) in 2025, representing a compound annual growth rate of 17.7 per cent. This is due to a surge in demand for professional service businesses, government initiatives, heightened demand for sustainable office spaces, economic advancement in budding markets, and a boost in investment. But with its developed landscape and dense population, can London keep up as the market grows globally?

Growth in the global market is set to slow slightly to 15.6 per cent, making it worth $80.38 billion (£59.7 billion) by 2029 – doubling in five years. This growth is expected to be driven by the revitalisation of office space demand, demand from an expanding technology industry, and increasing capital undertakings.

However, according to the latest report from Savills on Central London office space, leasing activity in the Capital increased only slightly in Q1 2025, up four per cent on the five-year average. Despite the turbulence bought on by tariffs, the volume of transactions completed over 50,000 sq ft was the highest number since Q1 2019. The report showed the Insurance & Financial sector continues to be the main driver of leasing activity and accounted for 24 per cent of Q1 take-up.

Despite leasing activity only growing slightly, active demand at the end of Q1 stood at 13.3m sq ft – up 39 per cent on the long-term average, with the number of requirements over 15,000 sq ft up 27 per cent on the five-year average, demonstrating increasing demand for larger spaces. The report states that there is yet to be any strong indication that occupiers are seeking to downsize their office space. Overall, there are more occupiers seeking to increase their space (48 per cent) than seeking to decrease the amount of space they occupy (14 per cent).

Cushman Wakefield has seen a rise in fitted offices, with small spaces contributing to a rise of ready-to-use office space in the UK. Six per cent of all buildings with availability in Central London have at least some of their space marketed as fitted, excluding spaces smaller than 5,000 sq ft. When these smaller spaces are included, the percentage rises to 55 per cent. This is due to increasing occupational costs including rent, service charges, fit out costs, and business rates, meaning smaller companies want to minimise moving costs where possible.

So can London keep up with increasing global demand for office space as new developments slow?

Richard Smith, Founder and CEO of flexible office broker, Office Freedom, commented: “London is still incredibly attractive to businesses of all sizes across the globe, with its strong services sector, workforce, geography, and developed economy. However, global trends indicate a thriving and growing tech sector will drive office take up, where in London, financial and professional services remain supreme. Therefore, the City may need to change its strategy to encourage more tech companies towards space in the Capital.

“We’re seeing an increase for ready-to-use spaces with flexibility at their heart, with businesses of all sizes adopting hybrid models and recognising many clients and employees may be travelling further to come into the office. We’re seeing a growing demand for office networks, so employees can experience the office environment around the country. This could be key in keeping the UK ahead of other countries, in terms of the service office market, and as a place to do business, to tap into the talent outside of London, as well as in the Capital. These networks can also help to reduce costs for small and scaling companies by needing less space in the city, which we’re seeing increasing demand for.

“London will always have a pull for people and businesses, but the government must do more to help businesses where possible to keep the UK competitive and productive as we enter a potentially uncertain period for the UK economy. However, the UK has more to offer than just London, so the growing trend in serviced office space could benefit other cities and towns around the UK if the Capital struggles to keep pace.”