City Leasing

Overview

Q1 2026 saw a slight decline in demand in the City following a positive 2025. Total take-up reached 1,200,000 ft, marking the lowest quarterly figure in three years. Nonetheless, the 266,000 sq ft pre-let to Herbert Smith Freehills at 1 Appold Street, EC2, was the second-largest City deal in well over 2 years. Although demand was reduced, the average deal size increased by 30% from c.9,000 sq ft to 12,000 sq ft.

Looking ahead, demand is anticipated to strengthen through the remainder of 2026. Jane Capital is understood to be seeking approximately 500,000 sq ft and is evaluating the former AO Shearman space at 10 Bishops Square, E1. In parallel, Lockton and Deutsche Bank are both pursuing requirements above 200,000 sq ft, while a number of law firms such as Jones Day, Pinsent Masons and Clyde & Co are believed to be continuing to be exploring relocation options.

Prime rents in the City increased for another quarter, reaching £99.50 per sq ft. This reflects annual growth of 7.5%. City tower rents continued to thrive with a new peak of £160.00 per sq ft, following Latham & Watkins’ acquiring the 32nd floor at One Leadenhall, EC3.

Development Pipeline

Vacancy across all grades of offices in the City continued its downward trend in Q1 2026, easing to 8.5% from 10.2% a year earlier. The supply of new Grade A space has further tightened further, with availability slipping to a five‑year low of 0.9%, despite the completion of c.425,000 sq ft of speculative development during the quarter.

Approximately 3.5 million sq ft is scheduled for delivery over the remainder of 2026, however around 50% already pre‑let. Occupiers with over 100,000 sq ft requirements have just 4 buildings in which to choose from, 10 King William Street, EC2 being the only new build. Completions are relatively evenly distributed across EC1, EC2 and EC4, which together account for 75% of the pipeline, however EC3 continues to struggle with availability, putting even more pressure on rents and occupier demand.

Development activity in the City core is still above average, but construction levels fell to a four‑year low in Q1 2026. Although 21 large schemes with planning consent could deliver over 9 million sq ft, only a small proportion is expected to complete before the end of 2027, with many delayed until 2028. As a result, supply is likely to remain tight for several years. At the same time, larger occupiers are starting to look for space much earlier, which is likely to increase demand for buildings that are still under construction.

Headline Market Deals

Key completions in Q1 2026 were Herbert Smith Freehills acquiring 266,000 sq ft at 1 Appold Steet, EC2, BP acquiring 205,000 sq ft at Ink Building, SE1, NTT acquiring 57,500 sq ft at Fresh Wharf, EC3, Quantexa acquiring 52,500 sq ft at The Delft, SE1, and Landmark acquiring 50,000 sq ft at 1 Great St Helens, EC3.

Allsop Transactions

The City leasing team continued a run of success in Q1 2026. A handful of key completions have been a Undisclosed AI-Tech firm acquiring 28,000 sq ft and AKT acquiring 20,000 at British Land’s Elder Yard, E1, HCA acquiring 15,000 sq ft at Stanhope’s Warwick Court, EC4, Plata acquiring 13,500 sq ft at Swiss Life’s 15 Bonhill Street, LCA acquiring an additional 14,500 sq ft and York St John’s University acquiring 8,000 sq ft at Trilogy Property’s Republic, East India Dock, E1 and Adaptavist Group acquiring 7,000 sq ft at Brockton Everlast’s Telephone House, EC2.