Central London’s office market is being reshaped by a straightforward dynamic. Occupier demand is concentrated on high-quality buildings in the most well-connected locations, at a time when the supply of true grade A space is tightening. The gap between what tenants require and what the market can provide is now expressing itself in two ways — rental outperformance for prime assets and accelerating obsolescence risk for older legacy stock.
For investors, this dislocation is creating a compelling opportunity to acquire well-located assets at reset pricing and reposition them through brown-to-green retrofit to deliver the quality, sustainability and amenity profile occupiers are willing to pay higher rents for, while materially reducing the risk of asset stranding.
A structural imbalance
The imbalance in central London’s grade A market is stark. Vacancy rates for top-tier space remain exceptionally low.
According to BNP Paribas, West
