London is the most expensive city for office real estate in Europe. In 2023, the per square foot cost of office space in London was higher than in any other European city. In West End, a Grade A office cost about 90 British pounds per square foot in 2023. Prime offices were even more expensive, at 135 British pounds per square meter.
Office yields
Prime yields in Central London fluctuate depending on the district, but West End areas tend to have lower yields compared to other areas, such as Stratford or Canary Wharf. The prime office yield in Mayfair/St. James' in 2023 was the lowest among the major London office submarkets. In real estate, yields measure the potential return of a rental property and are calculated as the ratio of the property's rental income to the investment cost. Typically, prime office yields in London are lower than the rest of the UK, which is mostly due to the highly competitive market and high investment costs.
Vacancy rates
Despite the high office rental costs in England’s capital city, vacancy rates in many of London's main office markets were below seven percent in 2023. This is good news for the office sector, as during the coronavirus (COVID-19) pandemic, the share of vacant office space across all Central London districts spiked dramatically. Compared to other European cities, London was in the middle of the ranking, alongside Frankfurt and Lisbon.
Average and prime rental cost for office real estate in London West End, England from 2000 to 2023
(in GBP per square foot)
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Savills. (December 29, 2023). Average and prime rental cost for office real estate in London West End, England from 2000 to 2023 (in GBP per square foot) [Graph]. In Statista. Retrieved August 24, 2024, from https://www.statista.com/statistics/378162/uk-london-west-end-office-space-monthly-rents/
Savills. "Average and prime rental cost for office real estate in London West End, England from 2000 to 2023 (in GBP per square foot)." Chart. December 29, 2023. Statista. Accessed August 24, 2024. https://www.statista.com/statistics/378162/uk-london-west-end-office-space-monthly-rents/
Savills. (2023). Average and prime rental cost for office real estate in London West End, England from 2000 to 2023 (in GBP per square foot). Statista. Statista Inc.. Accessed: August 24, 2024. https://www.statista.com/statistics/378162/uk-london-west-end-office-space-monthly-rents/
Savills. "Average and Prime Rental Cost for Office Real Estate in London West End, England from 2000 to 2023 (in Gbp per Square Foot)." Statista, Statista Inc., 29 Dec 2023, https://www.statista.com/statistics/378162/uk-london-west-end-office-space-monthly-rents/
Savills, Average and prime rental cost for office real estate in London West End, England from 2000 to 2023 (in GBP per square foot) Statista, https://www.statista.com/statistics/378162/uk-london-west-end-office-space-monthly-rents/ (last visited August 24, 2024)
Average and prime rental cost for office real estate in London West End, England from 2000 to 2023 (in GBP per square foot) [Graph], Savills, December 29, 2023. [Online]. Available: https://www.statista.com/statistics/378162/uk-london-west-end-office-space-monthly-rents/