The flight to quality continues as Prime and Grade A space dominate leasing activity across the South East
Summary
Take-up in the South East reached 1.47 million sq ft in H1 2025, which was 9% above the total recorded in H1 2024. This total highlighted the resilience of the market against a backdrop of weak economic growth. The flight to quality continued in the market, which is supporting leasing activity. Supply has fallen to its third-lowest level on record, with just 12.3 million sq ft available and is expected to be at its lowest level ever recorded by the end of the year. The lack of supply and limited development pipeline is supporting rental growth for both Prime and Grade A product.
Total take-up at the end of H1 2025 reached 1.47 million sq ft, a 9% increase on H1 2024, 15% above the five-year average, and just 1% below the ten-year average. This strong performance was largely driven by a robust Q1, while Q2 2025 saw a slowdown, with 528,000 sq ft leased, 6% below the five-year average and 27% below the ten-year average for the same quarter. The backdrop of continued geopolitical and economic uncertainty has resulted in transactions taking longer to conclude, which has impacted take-up levels in Q2.
The flight to quality across the region continued in Q2, with Grade A and Prime space accounting for 85% of all leasing activity in Q2 and 81% of all space leased in H1, demonstrating there is sustained demand for high-quality space. This trend is supporting leasing activity across the region. Twenty-six markets surpassed their pre-Covid five-year H1 average. Notably larger centres have experienced an uptick in activity, including Reading (up 29%), Croydon (63%), Guildford (105%), and Uxbridge (268%), highlighting the appeal of submarkets that can offer both high-quality office space and a variety of local amenities.
Certain markets have experienced a marked increase in activity, driven by occupier movement due to the conversion of stock for alternative uses. This is evident in Brentford, where Cineworld, GL Assessments, and Brentford FC have a combined 48,000 sq ft of active requirements in West London, due to the proposed residential conversion of their current premises. This ongoing displacement of occupiers is expected to support market take-up levels in the short to medium term. According to Savills, approximately 11 million sq ft of stock has been acquired for alternative use across the region since the start of 2024.
The Western Corridor was the most active geographic region across the wider market in H1 2025, accounting for 57% of take-up recorded
Andrew Willcock, Head of Greater London & South East Office Agency
There was a notable uplift in leasing activity within the 20,000–49,999 sq ft size band, with 19 deals completed, 27% above the ten-year average. Key deals in Q2 included Worley Parsons leasing 48,000 sq ft at Building 6, Chiswick Park; The Romans Group taking 35,000 sq ft at Building 1, Meadow Business Park, Camberley; and Amentum securing 34,000 sq ft at 1240 Arlington Business Park. Meanwhile, smaller occupiers continued to dominate leasing activity across the South East in H1 2025, accounting for the majority of transactions with 60 recorded deals under 20,000 sq ft.
The Western Corridor was the most active geographic region across the wider market in H1 2025, accounting for 57% of take-up recorded. Heathrow experienced a notable surge in activity, with the number of deals rising by 150%. The Western Corridor was dominated by the manufacturing and industrial sector, comprising 42% of total space leased. With the Government’s £2.2 billion defence spending uplift announced in the Spring Statement, the South East is well-positioned to benefit, given the concentration of defence-related businesses and infrastructure.
Savills is currently tracking 3.97 million sq ft of active demand within the region, comprised of 643,500 sq ft of deals currently under offer and 3.33 million sq ft of requirements. Based on current demand and economic growth projections, it is anticipated that year 2025 take-up in the Greater London and South East region will reach 2.7–2.9 million sq ft, which will be on par with the three previous years.
SUPPLY IN GREATER LONDON AND THE SOUTH EAST FALLS TO THIRD-LOWEST LEVEL ON RECORD AS DEVELOPMENT PIPELINE STALLS
Supply in Greater London and the South East is currently at its third-lowest level since records began, with just 12.3 million sq ft of space available across the region. Prime and Grade A space accounts for 55% of total availability, totalling 6.7 million sq ft. This is 5% below the five-year average, underscoring continued pressure on high-quality stock, which is likely to intensify further.
The Thames Valley continues to lead with the highest proportions of stock, with 2.93 million sq ft of available space, and 68% of this being of Grade A standard. The highest proportion of prime is located in West/South West London, making up 33% of the total space available.
The development pipeline has stalled in the South East Region, with no developments expected to complete beyond 2026. The only speculative development under construction is Trehus, Maidenhead, which comprises 65,000 sq ft. There is currently 536,000 sq ft of space under construction, with 87% still available to let.
PRIME SUPPLY SHORTAGE LIMITS RENTAL GROWTH IN H1 2025, BUT NEW HIGHS EXPECTED IN H2
The lack of available prime supply has impacted on new record high headline rents being achieved across the region in H1 2025, after 16 submarkets set new rental highs in 2024. This is reflected in the take-up of prime space, only accounting for 8% of take-up in H1 2025 compared to 34% in H1 2024. It is expected that new record headline rents will be achieved in H2 2025, most notably in South West London, where prime space is under offer.
Increasingly, the rental gap between Prime and Grade A buildings is expected to narrow due to a lack of competing prime supply. This is a trend we expect to materialise across the region, most notably in larger centres. Landlords and investors can capitalise on this market dynamic with the lack of development set to result in prime supply remaining constrained.
Savills defines Prime Grade A as best-in-class office space that is ESG-compliant (EPC A&B) and contains multiple amenities; it has been tracked since 2020.
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