In London and India, flexible workspaces are growing rapidly, as companies seek shorter leases, adaptable layouts, and greener, more sustainable offices. Demand for turnkey solutions is rising, and landlords are increasingly stepping in with their own branded flex offerings.
At the same time, prime office rents are climbing across major global cities, from San Francisco to Frankfurt, even as some markets face oversupply and weaker demand. In the U.S., a recovery is underway—but it’s uneven. Top districts like Manhattan and San Francisco are seeing occupancy rise, while many other markets still struggle with high vacancies and growing financial stress. Some cities are even facing billion-dollar shortfalls in tax revenue.
The result is a market that’s both promising and unpredictable. Flexible workspaces are thriving, landlords are regaining leverage, and tenant expectations are changing fast—but not every city is keeping pace. For operators, investors, and occupiers, understanding where demand is real and where challenges remain has never been more important.
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Industry News
London’s flexible office market, currently 12% of the city’s office stock, is projected to reach 20% by 2030 — totaling 50 million sq ft. Growth is fueled by evolving tenant demands for short-term, turnkey space and a surge in landlord-run “brandlord” flex offerings, expected to triple to 3 million sq ft. Managed flex space is also set to rise 70%, highlighting flexibility as a core requirement in the capital’s office ecosystem.
India’s top seven cities are set to absorb 70 million sq ft of Grade A office space in 2025, with 60 million sq ft more under development. Demand remains strong for quality, flexible, and sustainable offices, with over 80% of new projects expected to be green-certified. Flexible workspaces are also rising, now making up nearly 20% of Grade A demand as companies embrace hybrid work and adaptable office solutions.
Global prime office rents rose 0.8% in Q3 2025, lifting the annual increase to 3.3% as tight supply and rising tenant demand boost landlords’ leverage. Asia Pacific saw mixed trends, with Kuala Lumpur up 6.5% and Chinese cities down nearly 2%, while North America rose 0.6%, led by San Francisco. Europe and the Middle East posted steady growth, with Frankfurt and Dubai among the strongest performers as fit-out costs stabilized but rents continued to climb.
U.S. office demand is rebounding, with leasing activity reaching 2019 levels as tech and AI firms sign larger, longer-term leases. Major CRE firms report record gains, while vacancy, though high at 14%, shows signs of stabilizing. Limited new supply and rising occupancy are giving landlords the advantage, and expanding demand in secondary markets suggests the U.S. office sector is shifting toward a stronger, landlord-favored market heading into 2026.
U.S. office recovery is concentrated in a few elite districts. Leasing activity is rebounding in top districts like San Francisco and Manhattan, driving occupancy higher, yet national vacancy remains near 14% with five of the 12 largest markets at 25-year highs. CMBS delinquencies hit 11.8%, some properties are selling well below purchase prices, and cities including San Francisco and Washington, D.C., face billion-dollar tax shortfalls, showing a clear divide between elite districts and struggling markets.
