Grade A Offices Capture 94% of Central London Take-Up

Grade A offices accounted for 94% of central London take-up in the first half of 2026, according to new Savills research, highlighting the challenge facing owners whose buildings fall short of the specification occupiers are choosing.

The analysis, published on 12 November, also identifies substantial rental differences between offices with strong sustainability credentials and non-rated stock. BREEAM Excellent and Outstanding buildings commanded rents 39% higher in the City and 49% higher in the West End.

For owners of older offices, the commercial question is whether investment can produce a building that tenants will occupy on terms that justify the expenditure. The financing question is how to fund the works and the period before dependable rental income is established.

Premium demand does not remove development risk

Savills reports City prime rents of £116.73 per square foot. Its accompanying summary connects strong demand for quality space with the viability pressures holding back new starts.

The supply picture is more nuanced than a shortage of construction everywhere. The main report identifies 16.1 million square feet already under construction, while warning that more than a quarter of expected completions through 2029 have yet to start and could be delayed or cancelled.

That leaves an opportunity for well-judged refurbishment, but competing schemes and local availability still matter. A landlord needs evidence about the particular location, building size and tenant market before treating a wider supply constraint as support for a project.

The rental premium is a comparison, not a refurbishment forecast

The 39% and 49% figures compare different groups of buildings. They do not show what happened to the same property before and after improvements, or isolate the effect of certification from location, age, specification and lease terms.

An owner should therefore avoid applying either percentage to the current rent and treating the result as the refurbishment business case. The relevant evidence is a leasing appraisal supported by comparable transactions, a realistic specification and an assessment of incentives needed to secure occupation.

Nor should Grade A and BREEAM be used interchangeably. Savills reports them as separate measures. The practical question is which improvements prospective occupiers value and whether the building can deliver those improvements at an acceptable total cost.

Define the works before selecting the finance

An office refresh involving decoration and finishes presents a different project from replacing major building services, altering the structure or undertaking a comprehensive refurbishment. A lender’s willingness to finance one does not establish its appetite for the other.

The starting point should be a building survey, a defined scope and a cost plan prepared by the appropriate professionals. Existing leases, access arrangements and any required consents need to be understood before the programme assumes that works can begin.

For partly occupied buildings, retaining tenants during phased works may preserve some income, but it can also constrain access and sequencing. The programme needs to show which areas remain usable, how disruption will be managed and when each part can be marketed.

Sustainability targets and letting compliance need separate checks

BRE’s refurbishment and fit-out framework covers the sustainability of improvements to existing commercial buildings. Its guidance distinguishes design-stage assessment from certification based on the completed works. A target rating should therefore be supported by an assessor’s plan, budget and evidence requirements.

BREEAM certification also serves a different purpose from an Energy Performance Certificate. Government guidance on non-domestic rented property sets out the minimum EPC E requirement for properties within scope in England and Wales, unless a valid exemption applies. Owners should check the building’s position rather than assume an intended certification resolves its legal letting requirements.

The specification should address both compliance and the occupier proposition. Meeting a legal minimum does not demonstrate that tenants will pay the rent required by the investment appraisal.

The funding requirement extends beyond the building contract

A workable budget includes professional fees, surveys, statutory applications, finance costs and an appropriate contingency alongside construction. It must also allow for expenditure while income is reduced: security, insurance, utilities and other property liabilities can continue during vacancy.

Letting costs deserve their own provision. Agent and legal fees, rent-free periods and any landlord contribution to a tenant’s fit-out can delay the point when an occupied building generates the cash assumed in the refinancing plan.

The owner should model these costs month by month, including VAT timing where relevant, with advice from the project accountant. The peak cash requirement can arise after physical completion if contractors must be paid before meaningful rent is collected.

Match the facility to the property’s current condition

An income-producing office with limited works may present a different funding case from a vacant building undergoing substantial alteration. The review should establish whether existing debt can remain in place, whether the current lender consents to the works and how additional expenditure could be funded.

Short-term property finance may be relevant where the asset needs acquisition, refurbishment or letting before a longer-term investment loan can be considered. Shawbrook’s published bridging proposition, for example, includes commercial property and refurbishment uses. That confirms a category of lending, not approval for a particular vacant office or works programme.

For substantial projects, staged refurbishment or development funding may warrant assessment. The borrower needs to understand the initial advance, equity contribution, conditions for later drawdowns, monitoring costs and who funds any overrun. Rolled-up interest also increases the amount that must ultimately be repaid.

Refinancing depends on value and income when the works finish

A finished building does not automatically qualify for the investment loan assumed at the outset. The proposed exit needs to reflect actual occupation, tenant strength, lease length, break clauses, incentives and the lender’s income tests.

RICS guidance on development property valuation recognises the complexity and potential variation of valuations involving planned or ongoing improvements. For an owner, that makes sensitivity testing essential: stronger rent can be offset by a lower valuation if the investment yield moves out.

Test a delayed letting before committing to the programme

The owner should examine what happens if works overrun, a prospective tenant withdraws or occupation begins later than expected. A financing plan needs enough time and accessible capital to handle a credible delay, including interest and holding costs.

A sale may be an alternative exit, but it requires its own appraisal of price, marketing time and outstanding debt. A lender extension should not be assumed. The fallback should be assessed before the facility is agreed, while the borrower still has choices over scope and leverage.

A finance review should start with the asset and the letting plan

For owners and their surveyors, the useful starting information is the tenancy schedule, current debt and maturity, condition report, works budget, proposed specification and evidenced rental appraisal. That allows an adviser to assess lender appetite for the actual project.

Willow can review suitable funding routes for acquisition, refurbishment and the intended refinance, working alongside the owner’s professional team. Savills’ research gives owners a clear reason to examine their office assets. Whether borrowing improves the position depends on a deliverable scheme, sufficient equity and an exit that remains credible under less favourable assumptions.