Britain’s chronic shortage of top-quality office space is forcing businesses into older, lower-grade buildings, with property experts warning that the City of London could effectively run out of prime offices to rent by 2028.
A prolonged post-pandemic “flight to quality” has seen companies compete aggressively for best-in-class office space, particularly in the West End and the Square Mile. But with new development slowing sharply and demand continuing to outstrip supply, firms are increasingly being left with little choice but to compromise.
Data from CoStar shows that demand for secondary offices, defined as four-star and below, turned marginally positive in 2025 for the first time since before the pandemic. Between 2020 and 2024, demand for such space had been firmly negative, as occupiers sought to exit older buildings in favour of modern, energy-efficient offices that could help lure staff back and support ESG commitments.
“If you want space in the West End or the City, you now have minimal choice,” one London leasing agent said. “That’s pushing companies either into secondary buildings or into new developments on the fringes of core locations, such as Canary Wharf or Stratford.”
The problem is most acute in central London. According to Knight Frank, by 2028 there will be no available prime office buildings left to rent in the City, as demand continues to collide with a collapse in new construction.
Rising build costs have made many office developments financially unviable. Developers estimate that construction costs have increased by as much as 40 per cent since the pandemic, while higher interest rates and geopolitical uncertainty have further dampened appetite for large-scale speculative projects.
As a result, work began on less than five million square feet of office space across the UK in 2025, the lowest level since the global financial crisis. By contrast, nearly 15 million square feet was started in 2019, underlining the scale of the slowdown.
This imbalance has fuelled sharp rental growth at the top end of the market. Prime West End office rents have climbed nearly 60 per cent over the past six years to more than £180 per square foot, while best-in-class City rents have risen close to 40 per cent to around £100 per square foot. Even Canary Wharf, traditionally seen as a lower-cost alternative, has seen rents edge higher, although growth there has been far more muted.
With options shrinking, many occupiers are being pushed down the quality spectrum to stay in preferred locations. Patrick Scanlon, senior director of market analytics at CoStar, said the trend was becoming unavoidable.
“Location continues to trump building quality for many occupiers,” he said. “As a result, firms are accepting slightly lower-quality accommodation in order to secure space in the areas they need to be.”
Agents expect this dynamic to persist, with fringe districts and secondary buildings playing a growing role in the office market, not because they are first choice, but because, increasingly, there is no alternative.
