Growing demand drive City of London prime office rents to narrow gap with West End

Prime office rents in the City of London have continued to rise, bringing them closer to levels traditionally associated with the capital’s West End as demand for high quality workspace outpaces supply. New figures from Savills show that average prime rents in the City reached £130.80 per square foot during the first quarter of 2026. By comparison, prime rents in the West End stood at £165 per square foot. The West End of London is typically one of the most expensive markets in the world.  The figures are based on the top 10 percent of Grade A office rents recorded during the period.

The increase reflects a longer-term trend that has emerged since 2023. While rental growth in the West End has remained relatively stable, the City has seen a much sharper rise in occupier costs. According to Savills, continued demand for premium office space and a limited pipeline of new developments are the principal factors behind the increase. Despite the widespread adoption of hybrid working models, many occupiers continue to seek large, high quality workplaces that support collaboration and client engagement.

Recent leasing activity highlights the strength of demand. US law firm Latham & Watkins has reportedly agreed terms for the uppermost floor at One Leadenhall, a newly completed 32-storey office tower close to Leadenhall Market. Cryptocurrency firm Ripple has also taken multiple floors within the building. Elsewhere, US law firm King & Spalding has expanded its presence at 8 Bishopsgate, taking additional space including the building’s top floor. The move brings the tower to full occupancy.

Demand is not confined to traditional financial district locations. Software company Quantexa has leased space on London’s South Bank, securing accommodation at rents that also reflect the growing premium attached to modern office environments.

The upward pressure on rents comes amid concerns about future supply. Industry forecasts suggest that the City could face a shortage of prime office space within the next few years as a result of reduced development activity following Brexit and the pandemic. Although planning approvals continue to be granted, relatively few large schemes are expected to complete in the near term.

Major occupiers are increasingly seeking to secure space well before existing leases expire, adding further pressure to an already constrained market. Landlords continue to offer incentives including rent-free periods, often amounting to up to two years on a ten-year lease. However, these incentives have not prevented headline rents from reaching record levels in some buildings.

In contrast, the West End office market has experienced a different pattern. Vacancy rates have risen above those recorded in the City, with a greater volume of available space and lower levels of take-up. The result is a widening difference in market dynamics between the two central London office districts, despite the continuing premium associated with West End addresses.