OPENAI AND ANTHROPIC HELP POWER CENTRAL LONDON OFFICE MARKET IN 2026
Artificial intelligence companies are rapidly emerging as one of the most powerful forces shaping the future of the Central London office market.
New figures from global commercial real estate advisor Avison Young show that technology and creative businesses accounted for 28 per cent of all Central London office take-up during the first quarter of the year, underlining how demand from AI and digital economy firms is continuing to reshape occupier activity across the capital.
The trend accelerated sharply in April, when AI companies Anthropic and OpenAI alone secured almost 250,000 square feet of office space between them, reinforcing predictions that AI-led demand will remain one of the defining themes of London’s commercial property market through 2026.
According to Avison Young, the expansion of AI, machine learning and advanced technology businesses is increasingly concentrating demand around high-quality, centrally located office space capable of supporting recruitment, collaboration and long-term growth.
AI FIRMS DRIVE DEMAND FOR PRIME OFFICE SPACE
Despite wider economic caution across the market, Central London office take-up reached 1.9 million square feet during the first quarter.
While this remained 23 per cent below the 10-year quarterly average, the data points to growing divergence between sectors still delaying real estate decisions and fast-scaling technology firms actively competing for premium space.
Demand for larger office floorplates was concentrated heavily around modern Grade A developments.
Among the most significant transactions was AI company Databricks securing 139,000 square feet at the Network Building in Fitzrovia, while Formula One acquired 98,000 square feet in Westminster.
The quarter’s single largest transaction came from BP, which committed to 191,000 square feet at the Ink Building in Southwark as part of a wider operational consolidation strategy bringing together teams from Surrey and St James’s.
For landlords and developers, the growing concentration of demand among AI and knowledge-economy firms is placing increasing emphasis on highly connected buildings with strong sustainability credentials and modern workplace infrastructure.
James Walker, Principal and Head of London Office Leasing at Avison Young, said the capital continued to benefit from its status as a global business and innovation hub.
“The Central London office market has an unrivalled status as a leading destination for occupiers and investors, and it’s encouraging to see occupier demand continue to grow, particularly across the tech and creative sectors, including AI, reinforcing London’s global appeal,” he said.
Walker added that the imbalance between demand and premium supply was likely to intensify.
“Looking ahead, this sustained demand is expected to place further pressure on Grade A supply,” he said.
“As a result, buildings that can offer excellent public transport connectivity, efficient operational costs and best-in-class ESG credentials will be best positioned to capture occupier attention and outperform the wider market.”
GRADE A SUPPLY CONTINUES TO TIGHTEN
A shortage of high-quality office supply is already beginning to emerge across Central London.
Avison Young said vacancy rates fell to 6.3 per cent during the quarter as take-up continued to outpace new completions.
Only 35 per cent of newly completed space remained available to the market, reflecting continued demand for upgraded and sustainability-focused workspace.
Among the most notable completions was the refurbishment of Peterborough Court in Holborn, which has already secured several occupiers despite broader market caution.
The trend highlights how occupiers are becoming increasingly selective, prioritising quality, energy efficiency and operational performance over older legacy stock.
OVERSEAS CAPITAL RETURNS TO LONDON
The report also pointed to growing confidence across the investment market, particularly among overseas buyers.
Although first-quarter investment volumes totalled £1.9 billion — below long-term averages — the market still recorded 43 transactions, including seven deals exceeding £100 million.
Asian investors accounted for approximately 25 per cent of activity during the quarter.
The largest transaction involved Japanese investor Daibiru Corporation acquiring a £300 million stake in Mitsubishi’s Warwick Court, while Indonesian developer Sinar Mas purchased Burberry headquarters Horseferry House for £131.8 million.
Dominic Amey, Principal, London Investment at Avison Young, said the return of international capital reflected confidence in the long-term strength of Central London assets.
“While inflation is expected to remain elevated, it’s encouraging to see confidence building across the investment market, particularly from overseas buyers,” he said.
“Asian capital continued to play a prominent role over the past quarter, underlining the attractiveness of Central London assets and the strength of international appetite for scale and quality.”
Amey said higher borrowing costs were also contributing to a more disciplined investment environment.
“Although higher borrowing costs may keep some debt-reliant investors on the sidelines in the near term, this is creating a more selective and disciplined market, with well-positioned buyers actively deploying capital and setting a positive tone for activity ahead,” he said.
CONSTRUCTION MARKET REMAINS STABLE
Meanwhile, construction activity across Central London remains relatively stable despite ongoing geopolitical and economic uncertainty.
Steven Mason, Principal and Managing Director of Building and Project Consultancy, London at Avison Young, said material pricing had largely stabilised during the second half of 2025, improving visibility for developers and contractors.
“Construction activity across Central London remains on a stable footing, with infrastructure output continuing to edge forward year-on-year,” he said.
“While ongoing geopolitical uncertainty could introduce some upward pressure on prices, this environment is driving a measured and pragmatic approach to development.”
Avison Young expects tender prices to rise by 3.5 per cent this year, reinforcing the importance of cost management and early-stage planning for major schemes progressing across London.
For the wider office market, the growing influence of AI businesses appears set to become one of the defining structural forces shaping demand, investment and development decisions across the capital over the coming years.
