Two things happening in the London office market right now seem to be at odds: record rents and record vacancies are being reported at the same time.
This paradox, however, shows the division of one market into two, which creates two opportunities for homeowners willing to invest.
Imagine two office buildings a mile apart in central London. One fully let, the landlord submits competitive bids for all available floors. One is losing employers, and there are benefits and periods of unemployment.
Many investors turn to financial professionals
To understand this situation, you must first examine the rental properties. According to data from SHB Real Estate, the City’s Grade A market rent reached £80.43 per square foot in the first quarter of 2026, up 15% year-on-year, while Grade A property in the City Core starts at around £70 and in the wider West End from £45. For landlords and investors working below those price points, fringe markets such as Canary Wharf offer Grade A properties from £40 to £65, while Stratford sits at £35 to £45.
As you move further away from central London, vacancy rates begin to increase rapidly, and you don’t even have to go far. Hammersmith has a vacancy rate of 22%, while Vauxhall has a vacancy rate of 18%. Much of this includes aging stock.
Well-connected areas where stock can still afford reasonable rents (without competing with City Core prices) will become more concentrated. This is where the most accessible opportunity lies, and where the demand for residents is growing.
Some lenders even ‘enter’ pockets of the market with a clear edge over their competitors
More than just another overhead when cost savings are prioritized, leading businesses need to attract top talent and therefore want better floor space (despite price) to create an environment that people want to move into.
Strong competition
With rental growth (6.3% annually and trending upwards) in central London offices, there is a strong opportunity for landlords looking to take advantage of the high demand for Grade A office space. Potential owners with significant amenities are also competing fiercely for Grade A prime stock.
In the old stock, the proposed B energy efficiency deadline of 2031 for privately rented buildings of more than 1,000 square meters is approaching, and the owners of secondary office buildings are faced with a difficult decision. Do they invest more to make the stock better or start thinking about getting out (taking a loss on the value they just had)? The secondary market is not easy to be in.
Leading businesses need to attract top talent and therefore want better floor space
As competition fuels high-end office stock, this also means that more lenders are competing for loans for these properties. This is good news for those looking to buy, as many lenders have had to be a little more generous with their terms to get a deal on their books. Some lenders even ‘enter’ pockets of the market with a clear edge over their competitors in at least one key area of the process.
As the demand for modernized offices with a guarantee of sustainability increases, many investors are turning to professional finance for large loan sizes and commercial mortgages that match their business strategies in acquiring high-quality properties. The same goes for owner-occupiers.
Professional finance brokers also have the added benefit of access to a variety of lenders, each of whom may have a product suited to different buyer profiles. They offer advice on finding a finance package that suits an investor’s needs in a way that a commercial mortgage with a high street lender cannot.
Prices are low
With yield stability, lower mortgage rates available than in recent years and the return of confidence, it is encouraging for those who have the means to compete and buy high-quality assets (which may already have strong tenants). For these investors, there are plenty of commercial mortgages available, while those who need to liquidate quickly tend to turn to short-term financing through structured commercial foreclosures.
To understand this situation, you must first examine the rental properties
For those who are willing to take a risk and increase the stock of the second office, there is an opportunity to wait. Second-hand stock is widely available and cheap; and, with enough modernization, these transformed outfits have strong tenants waiting in the wings. These heavy maintenance projects may require significant installation but, equally, the finished buildings will also gain significant value.
Having a professional lending partner with expertise in a full range of important financial products is essential in today’s real estate market.
Lucy Waters is managing director at Aria Finance
This article appeared in the July/August 2026 issue of Mortgage Strategy.
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