LREF 2025: Office Renaissance

The mood on the Keynote Stage was something London’s office sector has missed for a while: guarded confidence. Stephen Pearson of Canary Wharf Group, Nick Grosse of Cheyne Capital, John Woodger of JLL, and Alexa Baden-Powell of GPE mapped a market that looks past the trough, with liquidity returning and leasing momentum improving, but only for the right product in the right places.

Capital is moving again, carefully

The panel anchored the discussion in what investors care about first: deal flow and price discovery. Central London has recorded roughly £6 billion of office trades year to date, with more processes actually clearing as the bid-ask gap narrows. Activity started in the West End and is now spreading gradually into the City. The composition of capital is shifting too. UK institutions remain selective, while international money, private wealth and non-bank lenders are leaning in, especially where sponsors can evidence pre-lets, EPC improvements and credible execution. As Grosse put it in a wider point on underwriting discipline, quality, specification and location are “doing the heavy lifting.”

Debt is available, but it is not indiscriminate. Lenders are underwriting specification, sustainability and service, not just yield on cost. Structures are more bespoke and often involve hybrid capital to bridge viability gaps. If coverage or exit requires heroic rent growth, equity needs to work harder or the business plan must change. That realism threaded through the session.

Leasing is firmer and occupiers are getting ahead of a thin pipeline

On the occupier side, H1 take-up was cited at about 6.4 million square feet, up more than 20 percent year on year. Requirements above 100,000 square feet are back on the board. Many corporates are bringing searches forward to secure future space, a rational response to a pipeline that is both smaller and more pre-let than usual. “Big occupiers are locking in sooner because they can see what is coming,” Woodger noted in a section on demand visibility.

The product brief is clear. Energy performance is non-negotiable. Wellness, amenity and transport trump almost everything else. Fitted and managed floors have crossed from experiment to expectation for a large slice of mid-market demand. That raises capex and operational complexity for landlords, yet when executed well it shortens decision cycles and can improve net effective rents. Alexa Baden-Powell described how GPE has moved from traditional property management to hospitality-style customer experience teams.

“Landlords are no longer just property managers. They are experience operators.”

Supply is the pinch point that could define 2026

The panel’s most forceful macro point was supply. Development starts are at multi-year lows, the result of planning complexity, build-cost inflation and higher debt costs. A large proportion of space under construction is already spoken for. Beyond 2026, genuine speculative prime looks thin. Pearson’s take was blunt: if that remains the case, the best space will be scarce just as demand normalises, which is a recipe for prime rent resilience and a wider gap to secondary.

This has practical consequences. Investors should expect tighter processes on true Grade A assets, with more bidders and less time. Occupiers need to calibrate lead times and be realistic on incentives for top-tier buildings. Developers face a narrow target: schemes with the specification, ESG outcomes and amenity set that lenders and tenants will pay for. Everything else is a slog.

The structural split: prime pulls away, secondary must choose

Everyone on stage returned to the two-tier reality. West End prime has already delivered meaningful rental growth since the pandemic. The City is improving, but the most supply-constrained West End pitches remain out in front. Secondary is not uninventable, but it needs a plan. In Grosse’s words, assets without a path to measurable ESG outcomes and service either “upgrade or change use.” Drifting is not a strategy.

Recent London examples show both routes in practice. Cheyne and Dominus’s 65 Fleet Street illustrate how an office scheme can pivot to student housing when planning and micro-market data support it. Others are deep retrofits using circular materials to cut embodied carbon and accelerate programmes. The common thread is evidence. Capital will support repositioning when the bones are strong, the capex is fully scoped, and the demand thesis is grounded in micro-market reality.

Policy watch: rent reviews and the price of uncertainty

An audience question on proposals to abolish upward-only rent reviews drew a pragmatic response. Prime landlords with strong tenants are likely to negotiate through it. The greater risk lies in underwriting noise. Lenders dislike unquantified cash-flow volatility. If policy reform increases outcome dispersion, some deals will need more coverage headroom or wider pricing. For fringe and secondary, the effect could be more acute and might accelerate change-of-use decisions. As one panellist framed it, “policy uncertainty will be priced,” and the first assets to feel it will be marginal product.

Canary Wharf’s multi-format playbook

Pearson widened the lens to Canary Wharf’s regeneration story. The recovery is not only a bet on office. It is diversification at scale across hospitality, culture and residential. New aparthotels, a 1,200-seat theatre, a stronger F&B backbone and curated ground-floor activation are designed to pull different customer cohorts all week, not only midweek. The subtext is relevant for the whole market: the buildings that win will be those that integrate workspace with reasons to be there before and after work.

How to act on this as investor, developer, lender or occupier

For investors, the actionable edge is to go early on prime and prime-adjacent buildings where EPC uplift and amenity upgrades can be delivered ahead of a thin pipeline. Expect tighter processes and be prepared to evidence your leasing and ESG execution assumptions. For developers, retrofit-first analysis is a must. Where new build is necessary, lock specification decisions and procurement sooner, and line up creditable pre-lets. For lenders, sponsor quality, capex certainty and leasing velocity remain the filters. Structured solutions will continue to bridge otherwise viable plans. For occupiers, the message is simple. Bring searches forward. The best fitted space is getting absorbed quickly, and negotiating power is drifting toward owners of truly exceptional buildings.

Across all roles, the discipline is the same. Start with micro-market truth. Align the business plan to policy risk and financing reality. And remember that London’s advantage is not only liquidity or transparency. It is the depth of demand for places that help people and teams do their best work.

Takeaways

• Recovery is real but selective. Liquidity and leasing have improved, led by West End prime, with the City catching up. The market is past the bottom, yet still highly discriminating.
• Supply will set the tone for 2026. Starts are low and much of the pipeline is pre-let, pointing to scarcity in true Grade A space and resilience in prime rents.
• Prime vs secondary is structural. Buildings with top ESG credentials, amenity and transport will keep pulling away. Secondary must either commit to deep retrofit or pivot to alternative uses.
• Debt is open on tighter terms. Lenders back experienced sponsors, fully scoped capex and early leasing evidence. Hybrid capital will keep filling viability gaps where fundamentals support it.
• Policy risk is a pricing variable. Potential rent-review reform and broader regulatory uncertainty will be priced by lenders and investors, with marginal assets feeling the effect first.