Accountancy firm PricewaterhouseCoopers (PwC), in collaboration with the Urban Land Institute, quizzed experts across the continent-wide real estate sector and found that the trend towards more eco-friendly office space is gaining momentum.
Indeed, a majority of the people polled in the study said that dealing with sustainability issues is now an “unavoidable” aspect of the commercial property business across the country.
A desire to cut energy bills, back up corporate promises, and attract the best employees was given as a reason why sustainability is now being taken seriously in office space markets throughout Europe.
Research teams and analysts aren’t yet willing to suggest that more sustainable office space can necessarily attract higher rental rates, but there are indications that tenants will prefer such space when they can find it.
Malcolm Preston, a PwC partner and expert on relevant sustainability and climate change issues, said: “Increasingly, the investment decision is not based on environmental issues alone; it’s become an economically rational choice for businesses when you consider the returns from energy efficiency driven by the green agenda.”
PwC has pointed out that its own recently completed office space in central London is the first in the UK to receive an ‘Outstanding’ sustainability rating from BREEAM certifiers.
Rental costs associated with office space in the City of London and the West End are likely to increase sharply in months and years to come due to a lack of supply and rising demand, at least according to the latest assessment of the Knight Frank commercial property firm.
Editor’s notes: In 2022 and 2023, a ‘flight to quality’ was observed among many businesses seeking to rent office space in both the West End and the City.
It was analysed that this was due to various reasons – employers were increasingly recognising the need for amenities that improved their employees’ time at the office. This would help improve performance and morale, encourage workers to return to the office, and help retain existing workers and assist with recruitment.
Another big driver was the environment and a leaning to rent sustainable office space – the reasons given for this were to cut emissions and running costs in the long term, but crucially, especially for larger corporations, to improve environmental, social, and governance (ESG) credentials.
Space that satisfied the above two requisites tended to be brand-new prime office space. And this demand for the best-in-class office space in London created upward pressure on rental rates.
For this reason, many businesses were opting to occupy flex office space in the capital. They found that many flex space providers in London could offer office space with great facilities for staff whilst also meeting ESG criteria, on short-term flexible leases and with all-inclusive office rental pricing.
In June 2026, the flight to quality by occupiers continued to be observed in London, Europe and across most office markets worldwide.
It had led to a ‘fight for quality’ with strong competition for the best office space. However, due to the pressures developers had been under since 2022, including those stemming from the conflict in Ukraine and other global events, supply was constrained across most markets.
This meant there were high levels of pre-letting activity with many landlords and investors refurbishing existing stock.
This supply-and-demand dynamic created continued upward pressure on prime office rents, with prime vacancy rates below 2 per cent in many markets.