CoStar Group: London Office Yields Rise 50bps, Spreads Narrow to 370bps
CSGP•London office yields rose 50 bps to 6.5% in Q1 2026, while regional yields fell 30 bps to 10.3%, narrowing the gap from 480 to 370 basis points. Central London yields climbed 30 bps to 5.7% as Big Six yields compressed 30 bps to 8.8%, tightening spreads to 310 bps.
1. London Office Yield Increase
Transaction-based office yields in London rose 50 basis points to 6.5% in Q1 2026, up from 6.0% in Q4 2025 and a recent low of 5.8% in Q3 2025, reflecting improving investor sentiment in the capital market.
2. Regional and Big Six Yield Compression
Regional office yields fell 30 basis points to 10.3%, reducing the yield spread to 370 basis points from 480 basis points two quarters earlier. Central London yields increased by 30 basis points to 5.7%, while Big Six office yields compressed by 30 basis points to 8.8%, narrowing spreads to 310 basis points.
3. Sector Yield Trends
Retail yields held steady at 7.1% as industrial yields compressed by 20 basis points to 6.9%, halting the upward trend seen throughout 2025 and suggesting stabilisation across major property sectors.
