Quarterly Review: Q3, 2025
The global economy has remained resilient in the face of tariff headwinds over recent months. There have also been some signs of improvement in advanced economies recently, albeit patchy. With inflationary pressures easing globally, monetary policy is set to loosen across the developed world into next year.
Central London office take-up stumbled in Q3, with a dearth of larger lettings. Not surprisingly given subdued activity, availability increased also and stands well above its 10-year average. Around 7m sq. ft. of new London office space is expected to complete this year, with a further 6m sq. ft. or so due in 2026 after which new supply is expected to be much weaker.
Central London’s dominance within office investment was sustained in Q3, albeit that the £1bn transacted was well down on Q2 and below the historic trend. Overall deal volumes in Greater London held up better than the office figures, but were down on a year ago and trail historical benchmarks, albeit with hotel and leisure investment a bright spot.
Regional office take-up was marginally up in Q3, while in the South East occupier activity stalled –
but the bigger picture was that demand in both was below par. As a result, availability remains
elevated. Nonetheless, the pipeline in regional markets is expected to reduce from next year
and concerns about supply shortages will persist, particularly for quality CBD space.
Outside of Central London, regional office investment remained notably weak in Q3 and activity in the South East saw one of its softest quarters on record. Within a generally tepid environment, there were some bright areas including shopping centres and multi-let industrials.