Consistent take-up despite global headwinds delivering strongest quarter since Q1 2025
Summary
- Take-up in Q1 2026 totalled 630,000 sq ft, the highest quarterly figure recorded since Q1 2025, reflecting a 12% increase compared to the average of the preceding three quarters.
- Deals over 20,0000 sq ft remained in line with the five- and ten-year averages, with Microsoft, Zebra, and Siemens leasing space above this threshold.
- Supply remains at a record low of 11.9 million sq ft, with just one new speculative development under construction.
Take-up
Q1 2026 saw the highest quarterly take-up recorded since Q1 2025, reaching 630,000 sq ft. This figure was 13% below the five-year average and 17% under the ten-year average, reflecting the continued impact of economic uncertainty and delayed decision-making that characterised the latter part of 2025. Uncertainty ahead of the 2025 Autumn Budget contributed to a softening in occupier requirements over the summer period, as occupiers paused or postponed commitments to new office space. Despite the reduction in overall activity, the market demonstrated notable resilience, with Grade A space accounting for 81% of all take-up, reinforcing the continued flight-to-quality.
Deals in the 5,000–9,999 sq ft range dropped by 20% on Q1 2025; however, activity in the 30,000–39,999 sq ft band exceeded both five- and ten-year averages. Deals over 20,000 sq ft matched Q1 historical averages, with large corporate occupiers driving overall take-up. Key deals included Microsoft leasing 79,000 sq ft at Here, Thames Valley Park, Reading; Siemens acquiring 28,000 sq ft at Botanica, Slough; and Ralph Lauren moving to occupy 21,000 sq ft at The Clarendon Works, Watford.
Reading, Leatherhead and Farnborough recorded the strongest levels of take-up in Q1 2026, with Reading 15% above its Q1 five-year average, Leatherhead experiencing its highest level of activity since 2020, and Farnborough take-up reached 44% above its Q1 pre-Covid average. Activity across these markets was underpinned by a series of deals from the Manufacturing & Industry sector. This includes a range of subsectors, such as pharmaceuticals, fast-moving consumer goods, manufacturing, and, notably, defence companies. Against a backdrop of heightened geopolitical uncertainty, the South East is well placed to capture a greater share of occupier demand from security, aerospace and defence-related businesses. Manufacturing & Industry and Technology take-up accounted for 50% of all leased space in the first quarter of the year.
Looking forward, Savills has tracked 1.7 million sq ft of active requirements in the first three months of the year, representing a 27% uplift on the same period last year and signalling increased occupier confidence in the market. Notable active searches in the market currently include Lego, Volvo and CGI.
Supply
Supply levels throughout the region are at a historic low, with only 11.9 million sq ft of space currently available. Of this total, 6.9 million sq ft is classified as Grade A, accounting for 58% of the overall supply. Prime space, which is either newly developed or comprehensively refurbished and currently contains multiple amenities, accounts for 14% of total supply, with the majority located within West/South West London.
There are undeniable economic and global headwinds; however, corporate activity – 50,000 sq ft + requirements – is healthy, and once volatility settles, we anticipate a number of lettings to complete on the prime space in the market.
Andrew Willcock, Head of Greater London & South East Agency
Despite only one speculative development currently being under construction in the region – Trehus in Maidenhead, which is due to complete in early 2027 – refurbishment activity has increased. 425,000 sq ft of space is currently being comprehensively refurbished to Prime or Grade A standard, which is expected to support rental growth across the market and help narrow the gap between prime and Grade A rents.
Rental Levels
New headline rents were achieved across several markets this quarter, including Maidenhead, Slough and Chelmsford. In Maidenhead, Zebra Technologies secured the remaining 30,000 sq ft at Tempo, pushing the prime rent in the submarket and Thames Valley to £60.00 per sq ft, while Siemens’ letting at Botanica led to a 5% increase in prime rents in Slough. Across the Thames Valley, Prime rents are already 7% above last year’s previous record, largely supported by limited supply and development. As a result, Savills is forecasting a further 4% growth per annum.
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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