Data shows weakening appetite for secondary office space, while Grade A buildings continue to attract occupiers
London office leasing demand declined 11% in the second quarter of 2026 compared with the same period a year earlier, according to Rightmove's Commercial Insights Tracker for Q2.
At the national level, demand to lease office space fell by 2%, though Scotland (+11%), the East Midlands (+1%) and the South East (+1%) all recorded growth over the same period.
Within London, leasing demand was negative across 10 of the 11 key boroughs tracked by Rightmove. Lambeth (+1%) was the sole exception. Kensington & Chelsea recorded the steepest fall (-34%), followed by the City of London (-30%) and Hammersmith & Fulham (-26%).
Analysts caution against reading the headline figures in isolation. Demand for older, lower-quality office space is weakening, while appetite for modern, energy-efficient buildings remains robust.
"It has to be remembered that 2025 was a strong year for office demand on our platform, so this quarter's annual drop is against a high base," said Louise Sedgwick, commercial director at Rightmove.
"Moreover, the headline statistics don't tell the whole story. Demand in the London office market is becoming increasingly concentrated on the best-quality office space, with well-located Grade A buildings offering high levels of amenities and strong environmental credentials continuing to outperform.
"On the other hand, secondary office spaces, especially in less attractive locations are struggling. This isn't just a London story - it's something that we're seeing in commercial centres across the country. Indeed, it's also something that is being reported in major office markets in many European cities."
Knight Frank's London research partner Shabab Qadar (pictured right) pointed to data supporting the flight-to-quality trend. "Flight to quality is gathering pace - Q2 take-up reached 3.1 million square feet, up 24% quarter on quarter and 11% above the long-term average, with 70% of activity focused on new and refurbished offices," he said.
"Momentum remains strong, with a further 3.7 million square feet under offer and active demand rising to 14.3 million square feet, up 43% year on year."
Qadar also noted that occupier demand is spreading geographically, with King's Cross and Euston recording 0.35 million square feet of take-up in Q2, "almost 200% above its long-term average, as AI-led occupiers reshape demand patterns across London".
Investment demand for offices fell 9% nationally, with London slightly outperforming at -7%. Performance varied across the capital's key markets. "Liquidity remains subdued, but sentiment is turning," Qadar said. "Investment volumes reached £2 billion in Q2, still 30% below the long-term average, but conditions are improving. With £2.6 billion under offer, £4.6 billion of available opportunities and rising REIT share prices, investor conviction is strengthening."
The industrial and logistics sector continued to outperform the broader commercial market, remaining the only segment to record growth in both leasing (+3%) and investment (+7%) demand in Q2.
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