Performing particularly well against the previous five-year average was the City of London, which saw take-up climb by 26% over the past 12 months.

While the last coronavirus lockdown is now more than four years behind us, work from home and hybrid models have remained part of the normal working week. However, signs have been mounting for some time regarding the return to the physical workspace, hailing a potential bounce back for the London office market.

“We’ve observed a steady rebound in office occupancy, driven by a welcome cultural shift,” said Jason Berry, group sales director at Crystal Specialist Finance.

“Many businesses — especially in finance, legal, and tech sectors — are encouraging more structured office attendance, which is naturally fuelling both demand and confidence in high-quality workspace,” he continued.

Jason isn’t alone in his belief that London office real estate is making a comeback.

“There is certainly a growing demand for the right assets in the right locations, and we’re seeing a flight to prime,” commented James Fenwick, structured finance analyst at Mera Investment Management.

Meanwhile, David Cardoso, portfolio manager at Albatross Lending Group, shared that occupiers were seeking high-quality, ESG-compliant environments that supported hybrid working models as momentum builds behind the return to office. He cited BNP Paribas’ central London office market update for Q1 2025, which said take-up of Grade-A space in the capital increased 27.5% compared with the first quarter of last year, reaching 3.11 million sq ft.

He highlighted that, according to Knight Frank, just under 66% of Q1 office take-up involved new or refurbished space, with 69% of leasing activity focused on Grade A stock. However, this renewed demand is clashing with a lack of supply, according to David.

Pointing to the rise in rents for London office space, the Savills Q1 2025 report highlighted London West End’s uptick of 21% which it said was driven by supply shortages, while CBRE’s ‘UK Real Estate Market Outlook for 2025’ said that Grade A office supply remained constrained across the UK, with high construction costs,  lower availability and higher debt costs leading to a relatively low level of development starts in 2024.

Office-based employment is expected to rise again this year after a pause in 2024, according to CBRE. Data from the ONS demonstrates that while UK work from home rates have remained largely steady since 2023, the hybrid working model has grown gradually over the past few years, with 28% of workers in Great Britain working in a hybrid fashion as of Autumn 2024.

Still, not all in the specialist finance sphere have seen an obvious increase in appetite for London office real estate. Marios Theophanous, credit manager at London Credit, said: “There’s been no discernible rise in demand for London office real estate among our borrowers.

“If anything, activity has remained focused on converting surplus office space into residential use, a trend that’s been gathering pace for some time.

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“In parts of the capital, ageing stock and shifting working patterns have left office buildings underused and increasingly viewed as development opportunities rather than long-term income assets.”

Marios noted that if there was a rise in demand, the bridging market would find a part to play: “If office demand does start to build again, bridging lenders will be well placed to respond.

“Unlike mainstream banks, which tend to move slowly and apply rigid lending criteria, bridging can offer a way in. Fast, flexible finance helps buyers secure assets, complete refits, or fund short-term holding costs.”

On the other hand, Jason said Crystal had seen a notable uptick in commercial-specific funding enquiries over the past six months, particularly for prime and Grade-A office stock. He too shared how bridging finance could be utilised in this area: “Our broker supporters are reporting increased interest from landlords looking to either reposition existing assets or move quickly on new acquisitions — both of which suit bridging finance well.

“Bridging can play a vital role by enabling investors to secure assets ahead of refurbishment or planning, especially where there’s a race to deliver the kind of best-in-class space that commands premium rents.

“In short, this rising demand in the London office market is feeding through into the short-term funding space, and I expect that trend to continue well into 2025.”

David also mentioned the role of bridging in the office real estate space, highlighting the ‘Bridging Trends Q1 2025’ report, which showed a sharp increase in investment-purchase bridging loans, up from 13% to 23%.

David noted: “Bridging is poised to play an increased role across acquisitions, refurbishment, vacancy bridging, and development delivery.”

He said that with prime assets transacting quickly, bridging enabled faster deal execution, and that short-term finance was being used to fund retrofits as occupiers had increased expectations around ESG compliance and specifications.

David continued: “Rising construction costs and delayed capital deployment have further increased reliance on bridging to complete schemes, particularly where 79.1% of City developments are already pre-let, demanding flexible and creative financing solutions to meet completion timelines.”

For James, the use of bridging in the office market varied depending on strategy, “particularly with regard to speculative acquisitions, there is a shortage of bank lending in this space but certainly some compelling opportunities”.

James added: “Equally, there are good assets that have had a tough ride over the past few years, or may be part let with significant value-add prospects which require bridging for the acquisition or to stabilise.”

As a whole, many in the specialist finance sphere seem optimistic about a London office revival, albeit in an age where work from home and hybrid working models seem here to stay.

If that rings true, everyone seems to agree that the bridging market has its part to play.

“As banks retrench from the sector and reduce their leverage, it presents a great opportunity for alternative lenders like ourselves to bridge the gap,” said James.