Office rents in central London are poised to reach record levels as demand for prime office space continues to outpace supply, according to recent market forecasts. Property consultancy Carter Jonas projects that rents for premium offices in West End areas such as Mayfair and St James’s could rise to £200 per square foot by the second quarter of next year. In the City of London, grade-A office rents are expected to hit an average of £100 per square foot.

These projections reflect a significant increase in rental rates over the past five years. Carter Jonas data indicates that typical rents in the West End have climbed more than 60 percent, currently standing at around £180 per square foot. Meanwhile, prime office space in the Square Mile’s financial district, which includes banking and insurance firms, has seen rents grow by approximately 32 percent to an average of £92.50 per square foot.

The sharp rise in rents is attributed to strong demand combined with a limited supply of available offices. Michael Pain, head of the London tenant representation team at Carter Jonas, emphasized that this dynamic is driven by “robust demand, limited choice and constrained supply,” noting that it could take until the next decade for development to catch up with tenant needs.

Notably, new rent benchmarks are being set within the City. One example highlighted is a reported agreement by technology company Ripple for the top floor of One Leadenhall, a skyscraper owned by Brookfield Properties, at £160 per square foot, marking one of the highest rates achieved in the area in recent times.

The evolving nature of work post-pandemic is influencing companies’ office requirements. Merrik Baggallay, managing director at BGO, a real estate investment firm, explained that firms are increasingly seeking office spaces with strong transport links and amenities that support employee wellbeing and social interaction, elements not easily replicated in home working environments.

Supporting this trend, Knight Frank estimates that active demand for office space in London has increased to 14.3 million square feet, up from 10 million square feet a year ago. Shabab Qadar, Knight Frank’s head of London research, remarked that offices are now viewed as key tools for attracting and retaining talent, as well as places designed to foster collaboration and productivity, thus driving premiums for properties offering such features.

With businesses competing to secure high-quality offices often still under construction, rental prices in London’s most sought-after districts are expected to maintain their upward trajectory in the near term.