Reassessing fit out viability: London vs. The UK

These high fit‑out costs coincide with elevated prime rents and a constrained development pipeline, reflecting a structural imbalance in the market. Limited supply of Grade A space but a continued need for high-quality fit-out are sustaining upward pressure on prime rents, while a higher interest rate environment has increased the cost of debt. This limits development activity and raises overall costs for both developers and occupiers.   

These dynamics are prompting a more fundamental reassessment of occupier strategy, consistent with the trends. Across EMEA, rising expectations around quality, amenity and technology are increasing the cost intensity of delivering workspace, even as the availability of prime assets remains constrained. This is especially the case in Zurich and Munich where costs are reaching CHF 4,891/m2 and €4,711/m2, respectively. 

“For many organisations, this is sharpening the focus on where to prioritise investment across their portfolios.”  

While London continues to attract demand driven by financial and professional services and the need for high-standard specification, well-serviced environments, the premium required is significant. 

Other UK cities are also becoming increasingly competitive, offering lower costs while still supporting the requirement for high-quality office space and the need to attract and retain talent. The result is a more deliberate portfolio approach, with occupiers balancing investment in best-in-class London space against opportunities to optimise cost, flexibility and resilience through regional locations and alternative workplace models. 

Supply constraints amplify risk 

The prolonged lack of confidence in the development market following the pandemic has resulted in a shortage of Grade‑A office stock across central London.

“This reflects a broader trend where a pandemic-era pause in development has limited the availability of prime office space across major European cities.”    

New office supply will be limited well into the 2030s, reducing occupier choice and intensifying competition for the best buildings; especially for large occupiers seeking floorplates more than 200,000 sq. ft; which can bring additional programme risk.  

This is further exacerbated by a sustained need for high-quality space, with occupiers concentrating demand on a small pool of high-specification, amenity-rich assets, driving competition, and reducing flexibility in delivery timeframes. 

The ‘stay vs. go’ decision has intensified 

The decision to stay in London has been amplified by these challenges. Occupiers typically face three options: relocate into new Grade‑A space at peak cost; refurbish existing buildings with associated complexity; or extend leases with minimal intervention, trading short‑term savings against future performance risk.

This decision is increasingly influenced by the scale of capital required, with high-specification fit-out costs in London exceeding £4,000 per m² in some cases, placing significant pressure on occupier budgets when combined with elevated rents. 

“This decision will be driven by a multitude of factors such as timescales, strategy, financial landscape and commercial negotiations.”  

In a market where landlords may prefer vacant possession to relet at higher rents, securing a viable ‘stay’ option often depends on early engagement between them and the occupier and robust evidence‑based business cases. 

With limited availability of top-tier space, occupiers are also facing increased competition for large-scale headquarters buildings, particularly those requiring significant floorplates, adding further pressure to decision timelines. 

Refurbishment: opportunity or risk? 

Refurbishment has moved up the agenda. In both the City of London and Canary Wharf, occupiers are increasingly choosing to retrofit their existing space rather than pursue costly relocations. This trend aligns with the broader shift identified in the guide, where organisations are investing more heavily in the quality and functionality of existing workplaces rather than expanding into new developments.  

Refurbishment can offer clear viability advantages: lower occupational rents, lower embodied carbon costs which offers improved ESG outcomes and the avoidance of wholesale business disruption associated with relocation. It also aligns with tightening sustainability expectations and investor scrutiny. 

“However, refurbishment is not inherently lower risk.”   

Projects are sometimes more complex than anticipated, particularly where works must be undertaken in occupied buildings. Hidden base‑build issues, longer programmes and operational disruption can erode perceived cost benefits. In some cases, a poorly planned ‘stay’ strategy can prove more disruptive and expensive than a well executed relocation. 

ESG as a viability threshold, not a differentiator 

In the London market, ESG and wellbeing standards are no longer optional. High‑performing environmental credentials, wellness certifications and digital connectivity are now baseline requirements for offices.

“While these standards can increase upfront fit‑out costs, failure to meet them risks becoming quickly outdated, weaker staff engagement and reduced asset performance.” 

As a result, ESG investment has become a fundamental component of long‑term viability rather than an optional upgrade. Occupiers are increasingly assessing value through the lens of resilience, adaptability and long‑term operational efficiency, rather than initial capital outlay alone. 

Regional UK markets reshape portfolio thinking 

Outside of London, the picture is materially different. UK cities usually offer significantly lower fit‑out costs and fewer Grade‑A supply constraints.

“As a result, some organisations are adopting portfolio strategies that retain London as a flagship or client‑facing hub, while shifting some functions to regional markets where viability is stronger.”

Rebalancing the split between London and regional offices reflects a broader reassessment of how real estate supports business outcomes, rather than status alone. 

A new definition of viability 

The London fit‑out market in 2026 remains active, but viability is no longer guaranteed by demand alone. Successful projects are those that align tightly with organisational strategy, engage the market early and take a realistic view of cost, risk and long‑term value. 

For occupiers, viability in London is not about doing less, instead it’s about being deliberate: choosing where quality truly matters, where flexibility can be built in and if the UK’s wider network of cities can play a more prominent role. In this environment, early planning, data‑led decision‑making and a clear understanding of trade‑offs are no longer advantages. They are essential.