Knight Frank figures show a rebound from a weak first quarter, a tighter West End and a City with more space and far more people looking for it

The London office market has spent several years being declared dead and then reported as busy, sometimes in the same week. The latest quarterly numbers from Knight Frank’s London office spotlight for the second quarter of 2026 lend themselves to neither slogan. Across London, take-up was 3.1 million square feet. The vacancy rate was 8.0 percent, with 21.6 million square feet available. Active requirements, meaning space that tenants are looking for, stood at 14.3 million square feet, and investment volumes were 2.0 billion pounds.

A Rebound From a Weak Start

The report describes the quarter as a recovery. In its words, leasing volumes bounced back after a subdued first quarter, driven by increased activity in non-core submarkets. It adds that near-term demand remains robust, with 3.7 million square feet under offer and more than 14 million square feet of active requirements. Investment activity saw a marginal uptick over the quarter, although renewed interest rate volatility weighed on sentiment. Speculative development under construction stood at 10.7 million square feet.

The phrase non-core submarkets matters. It suggests that part of the improvement came from locations outside the best-known districts, which are the places where occupiers have been willing to compromise on address in exchange for lower rent. The report does not say how large that effect was, so it is a pointer and not a measurement.

The West End and the City Side by Side

The two main districts tell slightly different stories. In the West End, take-up was 1.41 million square feet, vacancy 7.0 percent, availability 6.96 million square feet and active requirements 3.37 million square feet. In the City and Southbank, take-up was 1.36 million square feet, vacancy 8.1 percent, availability 11.90 million square feet and active requirements 9.26 million square feet. The West End edged out the City on take-up and has tighter vacancy. The City has more available space and substantially more active demand, which means more tenants are looking there, but there is also more for them to choose from.

That combination is typical of a market that is picky rather than weak. Tenants are looking, but they are comparing. Our own account of how the City of London turns into a spreadsheet makes the point in jest, and the numbers make it in earnest: the City’s challenge is converting enquiries into signed leases.

What Space Costs

Prime rents per square foot, as listed in the report, were 185.00 pounds in the West End core, 115.00 pounds in Marylebone, 102.50 pounds in the City core, 102.50 pounds in Fitzrovia and Knightsbridge/Chelsea, 48.50 pounds in Stratford and 32.50 pounds in the rest of Docklands, which was the lowest listed. The spread is enormous. A tenant who moves from the West End core to Docklands pays about one-sixth of the rent per square foot, which explains why finance and professional firms keep recalculating where they need to be.

Canary Wharf sits in the Docklands category. In the report, Docklands and Stratford recorded 0.31 million square feet of take-up and a 10.7 percent vacancy rate. The report does not break out Canary Wharf alone, so it would be wrong to attribute that figure to the estate. Our guide to Canary Wharf’s skyscrapers, suits and lunch crowds gives the cultural picture, and the story of the spreadsheet with a view is a fair description of what an office tower sometimes feels like from inside.

The Pipeline Problem

With 10.7 million square feet under speculative construction, the market is betting on future demand. The report’s charts cover 2024 to 2030, but the values cannot be read from the text I could access, and the pre-let shares listed do not clearly attach to particular areas. What can be said is that speculative building continues despite the vacancy rate, which suggests developers expect the best buildings to fill and the oldest to empty.

That is the quiet story of the London office market: a split between buildings that tenants want and buildings that they tolerate. A modern, well-connected block in a good location can attract a tenant even in a soft market. An older block with poor energy performance and awkward floor plates faces a harder time. The vacancy rate is an average, and averages hide that split.

What It Means for Tenants

For a business looking for space, the numbers point to a few practical conclusions. There is room to negotiate in the City, where availability is high. The West End is tighter and more expensive. Docklands and Stratford offer much lower rents for those who can accept the trade-offs. Active requirements suggest competition for the best space, so a tenant who waits risks losing it.

It also suggests thinking about what an office is for. The pattern of hybrid working has not produced the collapse in demand some forecasters predicted, but it has changed what tenants ask for: better quality, better location and more flexibility. Those wants are visible in the numbers, in the form of a vacancy rate that has not run away and a pipeline that continues to build.

A Note on Reading Reports

Agents’ reports are useful and not neutral. Knight Frank earns its living from lettings and sales, so a market that looks active is good for business. The sensible reader treats the figures as a source and checks them against other agents’ reports for the same quarter. Other firms publish their own numbers, often with slightly different boundaries, and the differences are worth reading.

For more on London commerce, see our business and politics guide, and for the wider magazine visit Bohiney Magazine. If you want your commercial property with less seriousness, The Daily Squib understands the open-plan office better than most surveyors. In the meantime, the lesson of the quarter is simple: the offices are not dead, they are merely very expensive and slightly lonely.

SOURCE: bohiney.com