London could be on the brink of a major office construction surge, with developers arguing that the right conditions are finally lining up – provided the planning system becomes more flexible.
Fresh analysis from the London Property Alliance and Knight Frank suggests that modernising the capital’s ageing office stock could generate an £84 billion economic uplift and release £262 billion in investment value. Their new report, Space for Change: Office space dynamics in central London, highlights the scale of the challenge: between 2018 and 2023, London’s central activities zone (broadly the area covered by Underground zone 1) lost around 14 million square feet of office space. Over the next five years, the capital is expected to face an 11 million square foot shortfall.
Much of the existing stock is no longer fit for purpose. The report notes that 56% of central London offices – around 147 million square feet – are rated as secondary space, offering ageing, lower-quality environments that will fall short of mandatory sustainability requirements by 2030. As a result, upgrading or redeveloping these buildings is becoming increasingly urgent.
Vacancy rates for prime space have tightened considerably. Availability of top-tier offices is near historic lows, with just 0.8% of prime and 1.7% of Grade A space currently unoccupied. Only a dozen very large single-floor offices above 40,000 square feet – the sort favoured by major firms consolidating staff – are on the market.
Demand from occupiers is strong. Companies are actively searching for 10 million square feet of space, around 7% above the long-term average, propelled chiefly by financial and professional services firms.
While 15.4 million square feet of new offices are due to complete between 2025 and 2029, a significant share is already pre-let or situated outside the high-demand areas of the City and West End. This pipeline not only falls short of replacing space lost since 2018, it also fails to meet current or future requirements.
Representing central London’s leading developers and investors, the London Property Alliance is calling for a shift in approach, arguing that major office projects should be treated as essential economic infrastructure. They say planning and regulatory processes should be streamlined to improve development viability.
Developers report that viability is one of the biggest barriers they face, made worse by a complex and often costly planning framework. They want planning authorities to simplify regulations, reduce obligations and lower the financial burden placed on new schemes.
Ross Sayers, chair of the City Property Association and head of development management at Landsec, noted that rising construction, labour and finance costs, combined with growing planning obligations, are putting many projects under pressure. He stressed the need for collaborative, pragmatic solutions to ensure central London remains a world-class business hub.
James Raynor, chair of the Westminster Property Association and chief executive of Grosvenor Property, warned that ageing office stock threatens future supply without intervention. He believes that modernising these buildings through flexible, forward-looking planning policies could unlock significant economic growth while supporting net-zero goals and local communities.
Shabab Qadar, Knight Frank’s head of central London research and author of the report, described a systemic problem in the office market: demand for high-quality space continues to rise, but supply cannot keep up as buildings are repurposed and planning hurdles restrict redevelopment. He argues that the case for upgrading London’s older office stock has never been stronger.
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