London's office market is showing clear signs of recovery, with vacancy rates declining in the second half of 2025 according to a new JPMorgan report. The analysis points to four key trends: falling vacancies, rising rents, minimal new construction, and a rebound in transaction volumes. Mid-Town and West End offices saw high single-digit rental growth.

A severe supply squeeze is fueling this momentum. New office construction hit a 21-year low in 2025, and between 2018 and 2023, the West End and City lost approximately 14 million square feet to alternative uses. This imbalance is expected to drive strong rental growth in core locations for years to come.

Transaction activity has accelerated in early 2026, with several major properties valued over £100 million under offer. Deals include Japan's Daibiru acquiring a stake in Warwick Court for about £300 million and Deka pursuing a £220 million St James's office. JPMorgan identifies GPE as its top pick for London and European offices.