2025: The great office space reset for the South East

The South East office market stands at a fascinating crossroads as we enter 2025. After a period dominated by tenant-favourable conditions, we’re approaching what many industry experts identify as a ‘watershed moment’, with a gradual shift in market dynamics which could see power returning to landlords – particularly those who have invested in meeting modern office occupier demands.

But what can we expect from the South East office market in the year ahead?

According to Agency Partner, Guy Parkes, it will be the year of the ‘great office space reset’, starting with market normalisation.

Expect market normalisation

The commercial property landscape has transformed significantly since 2024, a year characterised by tenants capitalising on attractive lease terms, while institutional investors strategically rebalanced their portfolios.

This rebalancing saw reduced exposure to the office sector in favour of the flourishing logistics sector.

During this period, vacant spaces were significantly devalued, prompting institutional landlords to secure tenants with notably advantageous terms to improve their assets’ marketability.

The strategy of offering compelling deals – some including unprecedented terms such as three years rent-free per five-year term – has successfully stimulated market activity and renewed occupational demand.

We expect this momentum to reach a crucial turning point by mid-2025, when the combination of growing demand and limited new supply will likely trigger market normalisation.

This will favour those landlords who have invested in cutting-edge design and specifications, PropTech, and robust environmental credentials.

Cost control driving strategic relocations

While 2024 saw intense scrutiny of revenue costs, 2025 marks a shift in perspective. Companies will now prioritise transparency and predictability in operating costs over raw cost reduction.

Premium workspace commanding higher rents will become increasingly accepted where it demonstrably enhances productivity and attendance, with key features that are becoming popular include:

• Rents and service charges tracked with CPI
• Pre-agreed exit dilapidations
• Turnkey fitted and furnished solutions

The introduction of advanced PropTech will help to lure occupiers seeking to relocate, enabling optimal service performance management, from heating and lighting to air quality monitoring.

Meanwhile, our analysis indicates a minimum five year payback period for landlord-fitted spaces to be viable, which suggests a trend towards longer lease terms, typically back towards 10 years with 5-year break clauses.

Transport connectivity to be a critical driver

The success of hybrid working models increasingly hinges on seamless connectivity. Major brands are demonstrating this priority through their location choices:

• Google’s campus at Kings Cross
• Vodafone at Paddington
• PWC and Pepsi’s moves to Reading rail interchange
• Johnson & Johnson’s move to be adjacent to the Elizabeth line, in Maidenhead

Space-as-a-Service revolution to continue

The condensed in-office time of hybrid working is driving a fundamental rethink of office space utilisation. Gone are the endless rows of desks.

The emerging “rule of three” in workspace design allocates equal proportions to:

• Traditional desking for task work
• Meeting spaces encouraging collaboration
• Break-out and leisure zones

Buildings are increasingly incorporating hospitality-style amenities and event spaces, recognising that office environments must offer experiences unattainable at home. Features now include:

• Cinema rooms
• Wellness facilities
• Multi-purpose event spaces
• Community-building areas

Hybrid working to reach maturity

The landscape of hybrid work continues to mature in 2025, with organisations taking a more sophisticated approach to workplace flexibility.

Rather than imposing rigid attendance requirements, companies are focusing on creating compelling office environments that naturally draw employees in.

This strategy has shown promising results – office attendance rose from 36% in 2022 to 43% in 2023, and projections indicate that more than half of employees will choose to work from the office 3-4 days per week in 2025.

This increased office presence will continue to bring new challenges and considerations. As more workers return to regular commuting patterns, we’re seeing growing pressure on transportation infrastructure, including increased road congestion and fuller trains.

In response, employers are recognising that they must compensate for employees’ commuting effort by providing an exceptional workplace experience.

The focus has shifted from simply providing a place to work to creating an environment that makes the journey worthwhile through enhanced amenities, collaborative spaces, and engaging workplace cultures

More landlord-favourable conditions

The South East office market presents a compelling opportunity in 2025.

With new development completions in the Western Corridor expected to remain below 150,000 square feet, supply constraints will likely accelerate the transition to landlord-favourable conditions.

However, investment success in this evolving market will depend on landlords’ ability to deliver flexible, technology-enabled spaces that create compelling workplace experiences while maintaining strong environmental credentials.

The future belongs to properties that successfully blend traditional office functionality with hospitality-style services and amenities, underpinned by robust technological infrastructure and sustainable practices, heralding a new era in commercial property, where value proposition extends far beyond basic space provision.