London developers call for emergency measures in office space squeeze
The capital’s largest developers have called on the government to introduce emergency measures to solve London’s office space crisis, which risks “constraining” growth.
London Property Alliance (LPA) is urging the government to designate offices as critical economic infrastructure to address dwindling supply and boost economic growth.
The LPA represents the capital’s largest property developers and investors, comprising the Westminster and City property associations.
Central London has lost 14m sq ft of office space since 2018, according to the LPA, who say the capital is attracting huge amounts of investment but may no longer be able to support it with the commercial space needed.
London topped the LPA’s ranking of other top cities – including New York, Paris and Hong Kong – as the best destination for foreign direct investment, but may not have space for it.
More than 7m sq ft of London’s lost office space was in Westminster, where planning applications fell by 75 per cent between 2013 and 2024.
Vacancy rate as low as 0.8 per cent
The West End is facing the most acute office shortfall, the LPA’s research found, with London’s average 7 per cent vacancy rate crashing to 0.8 per cent in this area.
The scarcity of supply is pushing up rents in the West End – rising more than 15 per cent in 2025, the most than any global city analysed by the LPA – and only 17 companies relocated in the last quarter.
Average vacancy rates are more than double London’s in Manhattan, at more than 20 per cent.
Alexander Jan, chief economic adviser at the LPA, told CityAM: “If London is to turn its global investment lead into jobs and growth, it needs a sustained pipeline of high quality office space in the West End. Without that, the capital risks constraining its own success.”
The group projects an office space shortfall of nearly 11m sq ft in central London over the next five years.
London’s economic growth is slowing, the LPA said, with its finance and insurance sector contracting by 0.2 per cent last year, while the same sector in New York grew by 6.1 per cent.
The growth of GDP in the capital is set to slow to 1.2 per cent this year, while growth in New York and Hong Kong stands higher at 2.8 and 2.7 per cent.
Give offices same priority as data centres, say developers
As much as £84bn in economic output and £11bn in rental income is up for grabs if the 147m sq ft of “secondary” office space in central London was upgraded to meet occupier standards, the LPA said.
The government could unlock this growth by designating office space as “critical economic infrastructure” under its national planning policy framework, which would give offices the same planning weight as data centres.
Charles Begley, LPA’s chief executive, said: “London’s position as the world’s leading destination for international investment is a remarkable strength, particularly at a time when global uncertainty is pushing capital towards cities with stability and strong underlying fundamentals.
“But it is in danger of winning the race for investment and then failing to provide the commercial space required for growth.”
Earlier this month, researchers at Turner & Townsend revealed the cost of building a skyscraper in London has soared by 40 per cent in the last five years.
A spokesperson for the Ministry of Housing, Communities and Local Government said: “Our proposed changes to the National Planning Policy Framework would help ensure more offices are given planning permission by making clear that their economic benefits are given serious consideration.
“We’ll set out next steps for the framework in due course.”