There has been a strong rebound in London’s office investment market with year-to-date volumes having reached £6.43 billion, already exceeding the full-year total for 2024, reports Cushman & Wakefield.
According to the global adviser's Central London Marketbeat Q3 2025 report, there is clear evidence of increasing confidence among investors.
In the third quarter, £1.67 billion was transacted, with the West End continuing to lead activity, accounting for 74% of quarterly volumes. Notably, Cushman reports that 10 deals over £100 million are under offer or have completed in the fourth quarter to date, indicating improved liquidity in larger lot sizes.
Major recent deals to complete include ENKA, one of Turkey's largest global engineering and construction groups, buying Park House, 16 Finsbury Circus, London EC2, for £186 million from a fund run by the asset management giant DWS, as revealed by CoStar News. And Royal London Asset Management bought at One Newman Street, or Oxford House, in Fitzrovia from GPE for around £250 million or a 4.48% net initial yield.
Martin Lay, head of London office capital markets at Cushman & Wakefield, said: "These figures for the Central London investment market show a clear sign of improving liquidity and investor confidence. With strong occupational fundamentals and a more favourable lending environment, we expect investor appetite to continue building into 2026."
Prime yields remained stable in the third quarter, holding at 5.5% in the City and 3.75% in the West End, following inward movements in the previous quarter. With inflation easing and further base rate cuts anticipated, the outlook for capital markets is increasingly positive, Cushman said.
On the occupier side, demand for high-quality space remains robust. Grade A offices continue to dominate leasing activity, however the development pipeline is not keeping pace. Cushman finds that across central London, there is 6.28 million square feet of space under construction and available due to be delivered between 2026 and 2028, circa 2 million per year. With average annual Grade A take-up of 5.8 million square feet recorded since 2021, Cushman flags a clear supply and demand imbalance of high quality stock, creating competition and putting continued upward pressure on rental values.
James Campbell, head of London office leasing at Cushman & Wakefield, said: "Occupiers remain focused on securing premium space in the best connected locations, full of F&B, leisure and amenity, but the supply of Grade A offices in these core markets is set to fall below one year from 2026, based on future development completions and average annual grade A take-up.”
With vacancy rates tightening in key submarkets, such as Mayfair, where Grade A vacancy now stands at just 2.36%, the imbalance between supply and demand will intensify, Cushman finds. It says this reinforces the case for rental growth and further development activity across Central London.