Artificial intelligence businesses are set to lease one million sq ft of London office space in 2026, according to Knight Frank, twice the amount AI companies signed for last year and the equivalent of roughly two fully occupied Gherkin buildings.
The forecast is a pointed rebuke to the theory that AI would hollow out office demand by erasing desk-based jobs. So far, the technology is filling floors rather than emptying them.
AI companies have already taken 661,100 sq ft of London workspace this year, Knight Frank’s data shows, up from 500,000 sq ft of new leases signed across the whole of 2025.
AI companies are reshaping London office space demand
Philip Hobley, head of London offices at Knight Frank, said AI companies had “become one of the defining new sources of demand” for “prime” office space in the capital.
“It is not just the volume of space being leased but the speed at which this occupier group is maturing,” he said. “These firms are moving from flexible and early-stage space into substantial, permanent headquarters because they are securing funding, growing revenues, building teams and making long-term commitments to London.”
The marquee deals bear that out. Anthropic, the American AI company behind the Claude chatbot, recently agreed to take 158,000 sq ft at British Land’s One Triton Square development near Euston. OpenAI, owner of ChatGPT, has leased 89,500 sq ft across a couple of blocks in King’s Cross.
Toby Courtauld, chief executive of London office developer GPE, said: “GPE and other major office developers have documented a clear influx of AI companies moving to London or establishing a base here. Real estate is the most tangible measure of economic confidence, and London’s AI sector is sending a clear signal. AI is not London’s threat, it’s a growth lever.”
More demand in the pipeline, and London beats Berlin and Paris
The wave has not crested. Knight Frank estimates that high-tech companies are currently hunting for a further 610,000 sq ft or so of London office space.
Among those with active requirements are Harvey AI, whose technology helps law firms scan and draft contracts, German tech unicorn Celonis, and Nebius AI, which recently received a $2 billion investment from Nvidia, the world’s largest company.
“[AI companies] are now coming to Europe for the first time and where are they coming to first? London. Not Berlin or Paris, they come to London,” said Chris Vydra, executive director at CBRE.
Chris Dunn, a researcher at Knight Frank, said most AI occupiers were targeting London’s “knowledge quarter” around King’s Cross, Euston and Fitzrovia, “where occupiers can access transport, universities, research institutions, policy networks and the wider technology ecosystem”. Access to that talent and research pool, he added, “is becoming as important to these firms as floorplate size or building specification”.
That geographic concentration matters for investors weighing where to hold or buy. It also echoes the wider return-to-office momentum lifting demand across the capital.
Record rents, and tenants signing for unbuilt space
This new demand is landing in a market already short of stock. A shortage of prime office space has been forcing some occupiers into lower-quality buildings, with construction having slowed sharply during and after the pandemic.
According to Knight Frank, prime rents in the City have risen 46 per cent since 2020, while West End rental growth has totalled 68 per cent over the past six years. London’s most expensive office districts are already commanding record headline rents, and Knight Frank’s own research shows development economics are pushing rents higher still.
With so little prime space available, Knight Frank said several AI firms were willing to sign leases on buildings that have not yet been built, committing years before the space is needed. Its latest London Office Market Report points to vacancy in new, high-specification stock at fractions of one per cent in the core markets.
What this means for investors
For landlords and investors, the read-through is clear. A deep-pocketed, fast-maturing occupier group is competing for the best space in a supply-starved market, and it is concentrated in a definable cluster around King’s Cross, Euston and Fitzrovia.
Owners of prime, well-specified stock in and around the knowledge quarter look well placed for continued rental growth, while pre-let appetite from AI tenants may underwrite the next development cycle. The risk has inverted: the question is no longer whether AI kills office demand, but whether London can build fast enough to house it.
