Central London Net Effective Rents Monitor
Q4 2025

Our Central London Net Effective Rents Monitor illustrates the combined impact of changes to both prime headline rents and the typical length of rent free periods across 22 central London districts.

The Index also reflects different lease lengths by providing analysis of five and ten year leases, which can have a significant impact on the net effective rent for each district.

Note: the impact of the timeframe for the ingoing tenant to carry out its fitting out works has not been factored into the Carter Jonas net effective rent analysis simply because the timeframe will be influenced by the quantum of space to be leased.

Key trends

• Headline rents across central London’s prime office markets remained broadly stable in Q4 2025. As an average across all markets, headline rents edged up by 0.1% from Q3 2025.
• While the overall trajectory is upwards, this continues the deceleration observed last quarter and marks a significant cooling in quarterly rental growth compared with the pace seen over the past two years.
• Rental growth in Q4 was concentrated in the West End’s Mayfair and St James’s district, where the prime rent increased by 1.5% from Q3, pushing it to a new record high.
• Rental levels were largely unchanged across all other districts this quarter, though several continue to post robust annual growth. Across all markets, headline rents increased by an average of 3.2% year-on-year.
• The quarterly uplift in Mayfair and St James’s enabled the district to overtake Marylebone as the strongest performer on an annual basis. Headline rents rose year‑on‑year by 13.3% and 9.5% in the two districts, respectively. This has moderated from the rental growth in the previous quarter, where rents rose by 15.6% in Marylebone and 15.5% in Mayfair and St James’s.
• South Bank remains the third‑strongest performer, with annual headline rental growth of 6.1% in Q4 2025, easing from 9.4% in the year to Q3.
• With typical rent free periods showing little movement in the 12 months to the end of Q4 2025, shifts in market dynamics are instead being captured through changes in headline rents. As a result, trends in net effective rents are broadly mirroring the growth seen in headline rents.
• As an average across the submarkets, net effective rents (assuming a 5-year lease) are 20.5% above their pandemic low and 10.9% above their pre pandemic high. This recovery is bolstered by strong, sustained growth in the West End. Meanwhile, East London and West London have seen a slower recovery in demand and more generous lease incentives.
• Figure 1 illustrates the change in prime net effective rents in central London and its key submarkets over the last quarter and the last 12 months (to Q4 2025).

Quarterly trends by submarket and district

• As an average across all London office submarkets, prime headline rents increased by 0.1% from Q3 2025 to Q4 2025. With no quarterly change in typical rent free periods, prime net effective rents (assuming a 5-year lease) also ended the quarter 0.1% higher.
• This growth was due to an increase in headline rents in the West End’s grade A market. Both headline and net effective rents (5-year lease) increased by an average of 0.4% over the quarter.
• The only district to see quarterly growth was the West End’s Mayfair and St James’s district, with headline rents and net effective rents (5-year lease) increasing by 1.5%. The acute disparity between supply and demand in the district offers limited opportunity to negotiate rent reductions and concessions, putting continued upward pressure on net effective rents.
• Elsewhere, headline rents and typical rent free periods remained broadly flat during Q4.

Annual trends by submarket

• Headline office rents across London have increased by an average of 3.2% year-on-year, decelerating from the 3.9% annual growth recorded in Q3 2025.
• This increase was primarily driven by strong rental growth in the West End, where rents finished the year 5.8% higher than in 2024. While annual growth has moderated from the 8.1% recorded in Q2 and Q3, it remains elevated relative to recent historical averages.
• The City of London submarket has also delivered respectable year-on-year growth, with headline rents rising by an average of 2.7% in the year to Q4 2025. However, this represents a moderation from the stronger momentum observed at the end of 2024 and into early 2025, with annual rental growth peaking at 7.6% in Q4 2024.
• The non-core submarkets of East and West London have recorded a modest uptick in annual rental growth, with West London rents (specifically the White City district) increasing by 2.2% and East London by 1.8% (concentrated in the Canary Wharf district). This growth is attributable to encouraging performance in Q3 2025. Occupiers are increasingly turning to these locations for larger floorplates, relative affordability, and their appeal as strategic business hubs.
• Midtown, which posted the fastest rental growth of all central London’s submarkets in the second half of 2025, has since seen growth ease to 1.4% by Q4 2025. This is primarily due to the limited transactional evidence in Midtown’s grade A segment during the second half of the year, a consequence of exceptionally low availability able to accommodate large floorplates.
• A slight contraction in rent free periods in the City of London submarket has pushed net effective rents (5-year lease) marginally ahead of headline rental growth, increasing by 2.9% on an annual basis. This reflects increased competition for well-located grade A office space which has enabled landlords to scale back incentive packages.

Annual trends by district

• The top 10 performing districts in the 12 months to Q4 2025 by prime net effective rental growth are illustrated in Figure 2.
• The West End’s strong annual performance was underpinned by exceptional headline rental growth in the Mayfair and St James’s district, which recorded a 13.3% year‑on‑year increase. The latest quarterly uptick in headline rents in Mayfair and St James’s pushed the district ahead of Marylebone to become the top annual performer.
• Headline rents in Marylebone rose by 9.5% on an annual basis. However, this reflects a softening from over 15% in Q3.
• The Fitzrovia district was also a significant driver of rental growth in both the West End submarket and London overall, recording a 5.0% annual increase, although a slowdown from the 7.7% growth reported in the previous quarter.
• South Bank remains a top performing district, posting 6.1% annual growth in headline rents.
  • Demand for prime space in the district is reflected in recent leasing activity. Notably, in Q4 2025, the American software company ServiceNow secured the first pre‑let at the Edge London Bridge development, committing to the upper floors.
  • However, this raises the share of space (by sq ft) due for delivery by the end of 2026 that has been pre‑let to only 7.3%, with the majority of the pipeline still fully available.
• Rental growth in the City of London’s banking and insurance district has begun to moderate, as the exceptional growth recorded in the latter half of 2025 drops out of the annual figure. Headline rents are now up 2.9% year-on-year, easing from the 16.7% growth recorded in Q1 and Q2 2025.
  • Nevertheless, strong pre‑letting activity (with 68.0% of the 2026 development pipeline already committed) continues to tighten the supply of prime office space, a dynamic that is likely to keep headline rents at record levels.
• Growth in the non-core submarkets of East London and West London has been concentrated in two districts. An increase in headline rents in East London’s Canary/Wood Wharf and West London’s White City in Q3 2025 has pushed annual rental growth up to 4.5% and 4.3%, respectively.
• With typical rent free periods largely unchanged, the imbalance between supply and demand across most districts is being reflected in rising headline rents. The City of London’s banking and insurance district has been the only area to experience a shift in typical rent free terms, highlighting the tighter availability of well‑located grade A space compared with a year earlier. This has pushed net effective rental growth (5-year lease) ahead of headline growth, at 4.0% versus 2.9%.
• Several districts have experienced little change in leasing conditions over the past year, with limited transactional activity and minimal new development resulting in flat net effective rents. The West End’s Paddington and Soho districts, in particular, have shown no movement, underscoring how demand remains focused on specific, high‑performing locations.

Longer term trends

• The change in net effective rents (expressed as an index) since 2020 across central London’s submarkets is shown in Figure 4. Although growth in net effective rents levelled off across most submarkets in Q4 2025, the broader trajectory remains upward.
• As an average across all submarkets, net effective rents (5‑year lease) are now 20.5% above their pandemic‑era low. They also continue to outpace their pre‑pandemic peak, standing 10.9% higher.
• The West End submarket continues to show the strongest post pandemic recovery and extended its lead in Q4. Net effective rents (5-year lease) are now 34.6% ahead of the bottom of the market in Q1 2021, and 23.9% higher than their pre-pandemic high, reflecting sustained record‑breaking rental levels.
• Although net effective rents in East London are 5.9% above their pandemic low, they are 4.3% behind their pre-pandemic peak. Likewise, West London net effective rents are 5.7% higher than their pandemic low, but still 1.8% behind their record level before the pandemic. This is largely a result of a slower recovery in demand relative to supply, leading to more generous rent free periods.

Outlook

Occupier demand

The Autumn Budget prompted caution among UK-based small and mid sized businesses, some of which paused relocation plans amid concerns over rising employment costs and potential tax increases. However, the central London office market is partly sheltered from UK policy shifts, given its large base of overseas-owned businesses. Their decisions are shaped more by global capital flows and long term strategic positioning than by domestic policy shifts.

Occupier demand is likely to remain subdued in early 2026, amid continuing uncertainty linked to US trade policy and a weaker domestic economy, before strengthening during the second half of the year as the positive effects of declining US interest rates begin to filter through the global economy. This should support job creation, especially in the financial and business services sectors, in turn translating into increasing demand for office space.

We also expect London’s growing Artificial Intelligence (AI) sector to become an increasingly important source of take-up over the next 12-18 months. This is underpinned by the UK’s position as a global centre of excellence in AI and London’s strategic positioning as a springboard to operate across continental Europe.

Supply

Declining levels of immediately available new and refitted grade A space across the West End, Midtown, South Bank, and the City of London is constraining choice and prompting footloose tenants to bring forward their property searches. As a result, more tenants are turning to pre let agreements on buildings under construction or refurbishment to secure space in preferred locations, which is further reducing the supply of uncommitted pipeline space.

At the end of Q4 2025, the proportion of the development pipeline (by floor area) due to complete in the next 12 months has increased to 47.7% from 40.5% in Q3 (Glenigan and Carter Jonas research). Although the near term pipeline remains limited, several large schemes achieved planning permission in the second half of 2025, and others with consent are expected to begin construction. These should provide some relief later in the decade as the next wave of completions comes through.

Rental conditions are set to remain highly polarised. In the super-prime West End, particularly in the Mayfair and St James’s districts, we expect acute shortages of best-in-class space to maintain upward pressure on rents. Across the wider central London markets, rents for new and refurbished grade A space are likely to remain stable during the first half of 2026 before growth re-emerges during the second half, as demand strengthens and availability continues to contract.

© Carter Jonas 2026. The information contained in this review is provided for general reference purposes only. While every effort has been made to ensure accuracy at the time of publication, no guarantee is given as to its completeness, reliability, or suitability for any particular purpose. We do not accept any liability for decisions, actions, or outcomes arising from the use of this data, including its use in business decisions or other formal proceedings. Any reliance placed on this information is strictly at the user's own risk. This data is not intended to replace professional advice. Users rely on this data at their own risk and should seek independent professional advice. Use of this data does not imply endorsement of any third-party conclusions.