The UK's office market is witnessing a slight but significant recovery as vacancy rates fell to 8.6% in March, the first decrease since the pandemic's onset. This comes after a period where vacancy nearly doubled to 9% by the end of 2024 as companies drastically reduced their office footprints. Recent data indicates a rebound, with firms moving into more office space, including major players like HSBC and Auto Trader, suggesting a trend of companies reversing their office downsizing strategies, especially in key cities such as London and Manchester.
According to commercial property data provider CoStar, the national office vacancy rate edged down to 8.6 per cent at the end of March, from 8.7 per cent at the start of the year. Though the decline is small, it marks the first fall in availability since 2020, when the UK entered its first Covid lockdown and vacancy stood at just 4.6 per cent.
Mark Stansfield, senior director of UK analytics at CoStar, said the data implies that most companies have now completed the 'rightsizing' of their office estates. 'There was a clear pattern during the early pandemic years of businesses reducing their space. But we're now seeing some of those same companies take more space again.'
In London, HSBC is reportedly seeking overflow office space near its new HQ by St Paul's Cathedral, concerned that it may have trimmed back too far. Magic Circle law firm Linklaters, which had planned to occupy 14 floors in its new headquarters, has now taken all 17.
The first quarter of 2025 saw companies move into one million sq ft more office space than they exited. Half of the UK's largest towns and cities registered falling vacancy rates, including London, Manchester, Sheffield and Cambridge.
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