Around 70% of new leases major corporations signed in the capital in 2025 were for expansion, pushing up rents and driving the London office market's best performance since 2019, Knight Frank has reported.

Around 50m sq ft of leases will expire by 2030, which is set to coincide with acute supply shortages for prime spaces in the capital

Knight Frank said the surge in large-scale demand in 2025 propelled London office take-up to 12.1m sq ft across 1,400 deals last year, the capital’s strongest performance since the start of the pandemic.

This drove record rents of £185/sq ft in the West End and £102.50/sq ft in the City, with a record 170 deals signed for rents above £100/sq ft.

For deals over 20,000 sq ft – which Knight Frank calls a bellwether size bracket where corporate strategy is most clearly expressed – 70 of the 98 deals signed last year were driven by firms relocating into larger premises, organic growth and new market entrants.

The deals absorbed 2.9m sq ft of space, which translated into a net increase in occupied floorspace across London. Only seven of the 98 deals were contractions, which Knight Frank said was evidence against the ‘death of the office’ narrative.

The 14 deals over 100,000 sq ft were double the number in this size bracket in each of the previous two years. The largest deal of the year was Squarepoint signing a 400,000 sq ft lease at 65 Gresham Street.

Philip Hobley, head of London offices at Knight Frank, said: “When large businesses move today, they are far more likely to expand than shrink. The office is no longer perceived merely as a fixed cost to be minimised, but as a strategic asset worth paying for.

“Occupiers are making deliberate, long-term commitments to high-quality buildings that can support their operations for the next decade and beyond. London’s business sector growth urgently requires new supply to be unlocked in all of its key submarkets to meet structural demand over the next five years.”

Knight Frank said the data pointed to a fundamental shift in businesses’ views of their physical footprint, with office space increasingly treated as a strategic asset. Four-day-a-week office attendance models increased last year among major employers. This increase in demand is set to coincide with acute prime space supply shortages following a slowdown in development in recent years.

The research highlights that up to 50m sq ft of leases will expire by 2030, fuelling new office requirements. This is despite vacancy for new, high-spec space being below 1% in the City and the West End, at 0.3% and 0.8% respectively, while popular submarkets like Soho, Marylebone and the City core have less than 15 months of available supply.

This drove prime rent rises of 15.6% in the West End and 7.9% in the City core. Major occupiers are securing space years ahead of leases expiring to avoid being priced out of an undersupplied market, with 2.7m sq ft of activity in 2025 being pre-lets.

However, a third of occupiers that seek new space end up staying in their existing building, whether due to lack of choice, costs or economic volatility.

Lease regearings also now account for 39% of all London office deals, with 1.7m sq ft currently under negotiation.

Knight Frank also reported an improvement in London’s office investment market, with turnover up 45% to £9.3bn in 2025, with Q4 alone accounting for £3.25bn – the highest quarterly total for 13 quarters. There were 25 £100m-plus deals, including eight above £250m, compared with none in 2024.

Shabab Qadar, London research partner at Knight Frank, said: “London’s office story is now defined by the interaction of expansionary demand, constrained supply and returning capital. Investor appetite is strengthening precisely because occupier demand is durable and visible.

“That capital is essential in bringing forward the next generation of high-quality space. Without it, London risks constraining its own growth.”