2026-02-06-莱坊-South_East_Greater_London_Offices_Q4_2025_14页_1mb

Summary of South East and Greater London Office Market in Q4 2025

Core Content

The South East and Greater London office market in Q4 2025 showed a mix of positive and subdued activity across different regions. The overall market demonstrated a strong performance in leasing, with the highest annual take-up since 2019, driven primarily by the Financial and Business Services (FSB) and Technology, Media & Telecommunications (TMT) sectors. Investment activity also saw a notable improvement, with record quarterly volumes and a shift in buyer dynamics, though average deal sizes declined. Development pipelines remained limited, with most activity concentrated in specific areas such as Cambridge and West London.

Key Market Trends

Leasing Activity

• Total Take-Up in Q4 2025: 665,350 sq ft, which was 15% below the five-year quarterly average but represented an 8% increase compared to 2024.
• Annual Take-Up: 3.4m sq ft, the highest since 2019, with 356 deals completed, the highest in the records.
• Sector Breakdown:
  • Financial and Business Services: 26% of total take-up
  • TMT: 23% of total take-up
• Grade A Space: Dominated leasing activity, accounting for 79% of total take-up in 2025.
• Active Demand: 3.95m sq ft at year-end, with FSB representing 26% of the pipeline.

Investment Activity

• Q4 Investment Volumes: £425m, the highest quarterly total in 12 months.
• Annual Investment Volumes: £1.3bn, 25% lower than 2024 but on par with 2023.
• Deal Size: Average deal size fell to £11m, the lowest since 2009.
• Major Transactions:
  • Frasers sold Chineham Park in Basingstoke for £90m
  • Iroko Zen acquired One Lyric Square in Hammersmith for £58m
• Buyer Dynamics: Private equity and UK property companies accounted for 76% of investment volumes, with a potential shift in buyer composition expected in 2026 due to global market volatility.

Development Pipeline

• Total Under Construction: 1.8m sq ft, with completion expected over the next 24-36 months.
• Concentration: Cambridge and West London accounted for 61% of the speculative total.
• New Developments:
  • Mill Yard (2027)
  • Botanic Place (2028)
  • Sovereign House (Q3 2026)

Regional Highlights

Greater Reading

• Annual Take-Up: 558,271 sq ft, a 7% increase from 2024 and the highest since 2018.
• Out-of-Town Activity: 81% of annual take-up.
• Major Deal: GCAP (BAE, Leonardo, and JAIEC JV) leased 155,524 sq ft across two buildings at Green Park.
• Active Demand: 477,500 sq ft.
• Grade A Vacancy: 12.8% at year-end, reflecting sustained demand for quality space.

West London

• Active Demand: 18 requirements for over 20,000 sq ft, indicating optimism for 2026.
• Key Transactions:
  • Pokemon at Chiswick Park
  • Orchard Therapeutics at 245 Hammersmith Road
• Development: Systems, One Kensington Olympia, and Platform are set to complete this year, potentially increasing competition for occupiers.

Cambridge

• Rental Growth: 27% in 2025, the highest in the South East.
• Development: Cambridge and West London accounted for 61% of the speculative total.
• Infrastructure: South Cambridge Railway Station, opening in summer 2026, will improve access to the Biomedical Campus.

Brighton

• Refurbishment: 75,000 sq ft of Sovereign House will be completed in Q3 2026.
• Occupier Interest: Two floors have already gone under offer, showing occupiers' preference for high-quality space.
• Market Dynamics: Landlords and developers remain confident, with recent refurbishments at Napier House and Middle Street.

Surrey Powerhouses

• Activity: Focused on town centre markets in Guildford and Woking.
• Major Deal: Larian Studios' £7.5m acquisition of One Farnham Road.
• Out-of-Town Performance: Surrey Research Park and Guildford Business Park saw success in leasing.
• Refurbishments: Forge building in Woking and Ranger House in Guildford Station are expected to drive continued activity in 2026.

Hertfordshire

• Q4 Take-Up: 87,550 sq ft, a 7% increase from Q3.
• Annual Take-Up: 259,690 sq ft, a 26% increase from 2024.
• Sector Breakdown:
  • TMT: 33%
  • Financial and Business Services: 22%
• Active Demand: 200,000 sq ft, showing sustained interest.
• Development: Verulam Point saw a major lease by Costa Coffee for 31,682 sq ft.

Market Conditions

• Availability: Tightened throughout 2025, with total availability decreasing to 16.2m sq ft from 16.5m sq ft at the start of the year.
• Grade A Availability: 10.42m sq ft, a 3.3% reduction over the past twelve months.
• Vacancy Rates:
  • Overall: 10.2% in Q4 2025, down from 10.5% in Q4 2024.
  • Grade A: 6.6% in Q4 2025, down from 7.1% in Q4 2024.
• Prime Office Yields:
  • South East: 7.00%
  • London: 5.25% (City) and 3.75% (West End), highlighting attractive opportunities outside the capital.

Knight Frank Views

• Roddy Abram: Emphasized the sustained demand for quality office space, with record headline rents in multiple South East markets. Noted the concentration of development in West London and Cambridge.
• Simon Rickards: Highlighted the stabilization in pricing and the return of repeat buyers, suggesting an attractive entry point for investors.
• Andy Nixon: Stressed the impact of the Ellison Institute on Oxford's demand profile and the importance of the Cowley line for out-of-town business parks.
• Jack Riley: Expressed optimism for Brighton, citing the Sovereign House refurbishment and improved connectivity via Thameslink.
• Tom Slater: Noted the strong performance of the Surrey Powerhouses, with a focus on town centre markets and the potential for further rent increases due to tight supply.

Outlook for 2026

• Leasing Events: Expected to reach 1.6m sq ft in West London, 1.0m sq ft in Reading, and 0.4m sq ft in Brighton.
• Development: Continued delivery of new schemes, with Sovereign House, Mill Yard, and Botanic Place expected to complete in 2026.
• Investment: Expected to shift towards overseas and UK institutional investors, driven by the stability and long-term cashflow potential of UK commercial real estate.
• Occupier Confidence: Increased, with occupiers willing to pay higher rents for premium space and demonstrating a preference for quality over cost.

Overall, the South East and Greater London office market is showing signs of recovery and stabilization, with a strong focus on quality and a concentration of activity in key areas such as Cambridge, West London, and Reading. The development pipeline is expected to drive further activity and potentially influence rent trends in the coming years.