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Top companies are abandoning searches for new London offices as a post-Brexit building slump and a sharp rise in fit-out costs persuade tenants to stay put.
Amid a supply crunch for high-end buildings, Accenture, Vodafone Group, Investec, EY, Salesforce, London Stock Exchange Group and Nomura all chose to remain at their main London sites last year, with more companies opting to extend leases or refurbish existing space.
“The bar for occupiers to move feels like it’s pretty high,” said Michael Wiseman, head of campuses at landlord British Land. “They don’t make a move for the sake of making a move.”
More of British Land’s tenants were opting to stay in their current premises compared with recent years, Wiseman added.
Vodafone said Paddington “remains a good position for us”, while Investec said it was “very happy” with the space it occupied, “not least since” it had completed a renovation of its client entertainment suite. The other companies declined to comment.
Some companies are still planning big moves, including Visa swapping Paddington for Canary Wharf and JPMorgan beginning the construction of its own tower in Docklands.
But for those seeking new premises, options are limited. Real estate broker Knight Frank has forecast that the vacancy rate for the highest quality London office space will drop to zero by 2028 and remain at that level throughout 2029.
The number of offices built over the past decade has been hit by the UK’s Brexit vote in 2016 and a slump in activity during the Covid-19 pandemic.
There were 15.5mn sq ft of office space under construction in London in the final quarter of 2025, down 9 per cent from a year earlier, according to data provider CoStar Group.
Between the second quarter of 2016 — the final data point before the UK voted to leave the EU — and the first quarter of 2021, London office space under construction fell by 4.5mn sq ft to about 12.7mn sq ft as the Covid pandemic deepened uncertainty facing developers.
While the total under construction later rebounded, it had now fallen in four consecutive quarters, according to CoStar.
“When we look at the year ahead into 2026 or 2027, because the pipeline simply isn’t there, we would imagine that more clients will potentially look to stay,” said Julie Ennis, who advises UK companies at brokerage CBRE.
More than one-fifth of respondents to a CBRE survey of tenants in the UK and Europe last year said there were “no suitable options” for relocation, while nearly 70 per cent said their current buildings met their “cost management” needs.
By staying put, companies can avoid the cost and hassle of moving as well as the need to pay two rents during the transition to new premises. Companies often had to cover the cost of two offices for 18 months to two years while they made the swap, according to people in the industry.
Fit-out costs for new office spaces were also rising, curbing companies’ desire to move premises, and were now higher in London than anywhere else in the world, according to consultancy Turner & Townsend.
Some 50 to 60 per cent of Savills’ mandates in central London involved helping clients to decide whether to stay put or move to a new office, said Paul Bennett, head of the broker’s occupier group for the region. Before the pandemic, when supply was more plentiful, most would choose to move rather than remain, he said.
Some companies that decided to extend their leases were trying to buy time in buildings that were good enough for the near term, said Michael Kovacs, founding partner of developer Castleforge. They were extending for a short five-year term, hoping there would be more office stock by then, he added.
Some companies had decided to stay in their existing offices for an even longer period, actively investing to retrofit and refurbish them, said Hannah Dwyer, head of work dynamics research for Europe, the Middle East and Africa at real estate adviser JLL.
Depending on the building, renovating an existing space can be cheaper than moving and fitting out a new one.
Investec said in August that it would renew its space at 30 Gresham Street in the capital’s Square Mile. The bank and wealth manager said that it and Rathbones, the asset manager with which it merged in 2023, would undertake “significant renovation works, in order to provide a high-quality home” for both businesses.
About half of the planning applications in the City of London over the past three years relate to retrofitting, according to the City of London Corporation.
Additional reporting by Kieran Smith, Ellesheva Kissin and Stephen Morris