The clock ticks for London office occupiers

World Economic Forum (WEF) President Børge Brende will conclude the group's annual gathering in Davos later today with a talk on how we can all cooperate 'in a more contested world'. You have to wonder how many exhausted delegates will be in the mood for that after a week marred by bickering among world leaders.

I talked on Wednesday about the degree to which geopolitical noise of the kind emanating from Switzerland this week can distract from the improving fundamentals in real estate markets. Even corners of the market that have been hardest hit by regulation and higher borrowing costs, like the UK's private rented sector, are showing clear signs of recovery (more on that below).

Commercial investors are preparing to move with conviction this year. Almost 90% of respondents (by assets under management) to Knight Frank's Active Capital Survey plan to increase their investment in commercial real estate in 2026. They plan to deploy $144 billion globally by the year-end.

A narrower horizon

The recoveries we're seeing now have been years in the making, and we now have some clarity over the forces shaping them. Philip Hobley and Lee Elliott introduced Knight Frank's London Series this week, just as the capital's office market is entering a new phase.

The pair pick four variables that should improve London's competitiveness over the coming cycle; time, place, product and capital. Time feels particularly salient; across the market, more than 50 million sq ft of leases will expire between 2026 and 2030 – a volume that compresses occupier decision-making into a far narrower horizon than any in recent memory. At the same time, construction schedules are lengthening, planning approvals are slowing, and refinancing peaks are converging with elevated debt costs.

This confluence has created what the team call temporal compression: the overlap of occupier, developer and investor timelines that were once offset. In previous cycles, leasing momentum could pause while development caught up or capital waited for clarity. Today, those feedback loops are misaligned. The result is a market that must act simultaneously across all fronts, even as its traditional buffers disappear.

You can read about how occupiers, developers and investors are reacting to this theme, plus much, much more more, in the report. 

Greatly exaggerated

Lenders granted 59,467 loans to residential landlords in the third quarter of 2025, up nearly a quarter on the same period last year, according to UK Finance data covered by the Times. Much of the activity is landlords locking in cheaper rates – remortgaging surged by nearly a third.

Still, purchasing activity climbed 4% to 16,885, and "rumours of the demise of the buy-to-let sector have been greatly exaggerated," UK Finance's James Tatch tells the paper.

Other indicators aren't so rosy. December's RICS survey showed falling tenant demand and instructions, and landlords will continue to struggle with onerous taxes and regulations. Nevertheless, borrowing costs are falling steadily, the population continues to grow and affordability in the sales market, while improving, remains poor. Attractive returns remain accessible for well-chosen assets, and in the absence of meaningful house price growth, landlords are sharpening their focus on cash flow as the primary route to performance.

A bumper period

Investors spent £1.7 billion in the UK built-to-rent market in the final quarter, according to Knight Frank figures. That brings the annual total to £4.7 billion – down 9% on the record £5.1bn invested in 2024, though it still marks the second best year on record and was 23% higher than the ten-year average.

The fourth quarter was, once again, a bumper period for investment as investors sought to complete transactions ahead of year-end. Northern LGPS and Local Pensions Partnership Investments’ £629 million acquisition of a housing portfolio from PRS REIT was the standout deal.

While multifamily housing (MFH) remains the cornerstone of the market, with more than £2 billion invested in 2025, single family (SFH) assets again performed strongly, accounting for 55% of investment and overtaking MFH for the first time on an annual basis. In total, a record £2.6 billion was invested acquiring or funding houses for rent in 2025 across 44 deals, as established players expanded their portfolios and new capital entered the market.

Investor demand in 2026 is likely to focus on assets that align with the deepest pools of occupier demand, particularly in the mid-market. To do this, investors will have to navigate the development opportunities arising from planning reforms, alongside ongoing challenges around building safety requirements and continued pressures around construction viability. There has been some progress here with the Building Safety Regulator (BSR) reporting that it halved legacy cases in the 12 weeks to December 2025, but there is further to go.

Main Street

The White House published more details of its plan to prevent "Wall Street from competing with Main Street homebuyers." See this note for more on the President's hopes to ban large institutional investors from buying more single-family homes.

There is no ban as of yet, but President Trump has ordered White House staff to “prepare a legislative recommendation to codify the policy” via Congress “so that large institutional investors do not acquire single-family homes that could otherwise be purchased by families.”

Large institutional investors are singled out without being defined, though the Treasury has been ordered to define it within 30 days. The Treasury must also “review the rules and guidance that relate to large institutional investors acquiring or holding single-family homes and consider revising them.” That may mean adjusting tax policy in unfavourable ways for SFR owners. Thanks to Katie O'Neill for the briefing.

In other news...

UK court gives go-ahead to challenge to large data centre (Reuters), London retains top spot in own global financial centre survey for sixth year (Reuters), and finally, the warehouse king of the biggest company you’ve never heard of (Times).