Article | Intelligent Investment
What does the spike in active demand tell us about the office market?
May 13, 2025 7 Minute Read

Analysis of Central London requirements
It would be reasonable to expect a high level of active demand to correlate with a high level of take-up.
We entered 2025 with active demand in Central London 70% higher than the five-year average, with 416 tenants in the market looking for a cumulative 12.8m sq ft. As this is the highest level of active demand since records began in 2016, we might expect a record year of take-up.
However, the relationship between the recorded active demand figure and take-up is not perfectly correlated. In the last five years, the average level of active demand was 7.5m sq ft, whereas the average level of take-up was 11.1m sq ft per year. So, there may be other factors influencing activity this year.
Figure 1: Central London active demand, period end
Why is the relationship between requirements and take-up complicated?
The mismatch between active demand and take-up can be attributed, in part, to technical factors. For example, only named occupiers are included in the requirements total, with confidential requirements excluded. In addition, flexible office operators are under counted due to the nature of that market. Both these explain why annual take-up can be higher than the active demand figure at the start of any given year.
There are also two principal ways in which active demand could be higher than the coming years’ take-up. Firstly, deals could take a long time to originate and complete meaning that some requirements will appear on the lists for more than one year. Secondly, requirements can be withdrawn.
At this current time both issues are in play. Anecdotally, searches are taking longer than was historically the case. This is partially due to the lack of available large high-quality units, pushing larger occupiers towards pre-let options which necessarily are more complicated to negotiate than built stock. In addition, (but also connected) a big proportion of requirements are for large space-takes, where searches typically take longer. At the beginning of 2025, there were 56 named occupiers in the market looking for 50,000 sq ft+, compared with just 31 at the beginning of 2017.
An analysis of historic active demand lists from recent years illustrates that occupier searches are taking a long time, especially at the larger end of the market. At the start of 2024, there were 54 requirements of 50,000 sq ft or larger, totalling 5.6m sq ft. Of these, 17 remained on the requirements list throughout the year to the start of 2025 (2.1m sq ft).
Sometimes requirements disappear
In the last few years, up to a third of requirements were withdrawn from the market. Of the 37 requirements over 50,000 sq ft in 2023, twelve led to take-up totalling 1.1m sq ft and seven were withdrawn over the year (563,000 sq ft). Of the 2024 list, 20 of the requirements led to new take-up (totalling 1.4m sq ft) and 19 were withdrawn (1.7m sq ft). Put another way, in 2023 only 32% of requirements led to take-up, and in 2024 only 36% of requirements led to take-up.
Two of the withdrawn requirements from 2023 and 2024 were from non-Central London occupiers seeking Central London space, and one requirement was withdrawn as a result of the company merging with another.
However, the majority of withdrawn requirements were existing Central London occupiers opting to stay and regear their leases (and in some cases expand or contract their footprint within their existing space) rather than to move to new premises within the market. In the ‘stay vs go’ debate, a large and growing number of occupiers are finding ‘stay’ a more attractive or viable option than ‘go’.
Figure 2: How did 50,000 sq ft+ requirements from the beginning of the year end up by the start of the following year? 2023 and 2024
To stay or to go?
Taking new office space rather than renewing when reaching a lease event date has clear benefits. In the years since the start of the pandemic and with the emergence of the return-to-work problem, many occupiers have used office moves as a way of adopting new workplace strategies and ‘magnetising the office’.
Staying put is not always a desirable or feasible option, especially if the space has become functionally or technically obsolete at the end of a long period of occupation, or if the landlord wants to vacant possession of their building. Comprehensively refurbishing and fitting out technically obsolete space while remaining in situ is disruptive to business continuity and is likely to lead to higher costs than the equivalent level of works carried out within a new building. Moving to new offices rather than staying put can also provide intangible benefits to employee morale and engagement through the creation of excitement and the ‘wow factor’.
With the fall in average lease length (Central London occupiers transacting in 2024 signed up for 10 years on average vs 15 years in 2004, for example), lease end dates are necessarily occurring sooner than they did previously. This, coupled with the fact that build quality has progressively improved over the decades, means that the likelihood of an office becoming technically obsolete upon lease expiration is lower now than was historically the case. For example, the typical lifespan of commercial HVAC is 15-20 years, five to ten years longer than the length of a typical office lease. It may also be unpalatable to many large corporates to dispose of office furniture before the end of their useful lives, especially if those companies have sustainability objectives.
Cost considerations
For those whose circumstances permit it, often landlords will offer very generous financial packages to incentivise occupiers to stay put, either in the form of capital contributions, rent free or rent discount.
Financial inducements are especially powerful in times of high rent inflation, such as today. A typical Central London occupier with a lease expiry today will find average rents 29% higher than when they signed ten years earlier.
And higher rent costs are not the only consideration. Over the last few years, the costs of fit-outs have increased rapidly. Currently, occupiers are looking at up to £500 per sq ft to fit out new space compared to £300-350 per sq ft in 2021. For a typical occupier taking 50,000 sq ft, this would add £7.5m-£10m to the costs of moving compared to what it would have cost just four years ago.
Other cost considerations related to moving offices include dilapidations and potentially double overheads.
Record high levels of requirements will not result in record high take-up
Even though we are recording a higher level of active demand than at any time on record, we don't think this will translate into record levels of take-up in 2025. This reflects the current combination of incentives to stay, disincentives to move, and a diminishing list of options (especially within core markets), which means that the trend towards a rising number of occupiers staying put will likely persist.
However, what this analysis of active demand tells us about the market provides cause for optimism. Even if ultimately a large number of requirements go unfulfilled during the year, it is indicative of the latent levels of demand from occupiers for Central London office space. Occupiers renewing and regearing, especially if on a short-term basis merely delays the requirement rather than permanently remove it from the market. The requirements of today might not be the new deals of tomorrow, but perhaps the following day.
Contacts
James Nicholson
Executive Director, Head of London & Metropolitan Occupier Transactions