London’s Future: AI-Driven Office Demand
Future growth prospects
London can look to AI activity in the more mature San Francisco market as a benchmark. We use scenarios to illustrate potential office demand under various growth intensities.
San Francisco is a leading indicator for London’s AI growth
We can base expectations for the impact of AI occupiers on the London market against market activity in San Francisco; assuming relativities from previous technological development cycles.
San Francisco is the dominant global AI centre – a market in which AI-related companies already occupy more than 7.0m sq ft of office space.
Footprint predictions can also be estimated based on previous technological evolutions; given the unprecedented demand in San Francisco during the mobile-app era (2008–2019), we’ve assumed that the AI era will generate 50-75% of that growth in office space. AI-related companies are projected to take up to 14.0m sq ft more between now and 2030 (or 2.9m sq ft annually).
San Francisco Office Footprint by Tech Companies – AI Occupancy Growth Forecast
Notes: Office footprint was determined by modifying cumulative leasing activity. Lease renewals and spaces given up by companies moving into larger offices were excluded. The analysis includes tech era companies founded in 1990-2000 for Dot-com, 2003-2014 for Mobile-App and since 2015 for AI.
What could this mean for London?
A comparison of San Francisco vs London during the mobile-app era can give indications for expected AI-era activity.
London’s AI era take-up could reach 4.0m sq ft
Central London experienced its mobile-app era from 2011–2022 – a three-year lag relative to San Francisco (2008–2019).
There was also a significant difference in the scale of demand between the two markets: at the point of maturity, San Francisco’s mobile-app era footprint was roughly five times higher than London’s mobile-app era take-up.
Applying the same pattern to AI, with growth in San Francisco beginning in 2020, we can draw parallels to activity emerging in London from 2023 onward. For instance the opening of OpenAI’s first international office at 50 Broadway in 2023 marked a key milestone for London as a city active in generative AI. This suggests that AI occupation in London began to mature in 2023, mirroring the same three-year gap observed during the mobile-app era.
Based on this ratio and following the same comparison, we project a baseline scenario projection of 4.0m sq ft cumulative take-up by 2033 (lower demand scenario: 3.1m sq ft). This baseline scenario suggests 2.5m sq ft of AI take-up in the next eight years; equivalent in size to 43% of the Central London office pipeline which is under construction and available to let.
Central London Office Take-up, Mobile-App Era and AI Era Projections (by 2033)
Will London fulfil its AI potential?
The future development of AI market activity is dependent on wider market dynamics – regulation, infrastructure, and power supply, plus the scale and nature of business adoption.
Inbound investment and office market activity implies that London is well-positioned to capture office demand derived from AI companies over the coming years. However, the evolution of AI is still uncertain.
Realising the market’s full potential will rely on proactive initiatives to promote growth and remove barriers. There are several market factors such as power supply and regulation which, although not directly related to office requirements, will influence the scale to which London can develop as a global AI destination and therefore attract a growing share of occupiers.
The recent hold on Open AI’s Stargate UK Investment on the basis of energy costs and regulation provides market evidence for the influence of these factors on AI advancements across the UK.
In addition, the scale and rate at which AI is adopted by London’s businesses will ultimately impact the role that it will play across the breadth of the London market.
Regulation
The UK has a context-specific approach to regulating AI which allows UK regulators to apply a set of principles to individual circumstances rather than applying a blanket policy. This can reduce upfront burdens to support fast innovation and growth, relative to other widely binding legislations internationally which can create additional compliance cost and regulatory burden. This should position the UK as attractive for companies adopting or developing AI. Furthermore, the UK’s early participation in the global governance of AI could even drive office requirements in regulatory fields.
Despite this, 72% of UK businesses still cite regulatory ambiguity as a barrier to adopting AI, with 81% of those in finance and real estate expressing this view. Furthermore, the rapidly evolving nature of AI technologies means that regulation is likely to require ongoing changes. This presents a near-term challenge globally, although the UK’s context-led approach should allow for legislators to be reactive relative to other markets.
Data Centres and Power Supply
The UK is the largest data centre market in Europe, and London is the dominant cluster, accounting for over 80% of national supply. Still, access to more data centre capacity is necessary for the growth of London’s AI ecosystem, but limited power and planning delays could inhibit this growth. The primary obstacle for data centre development has been a legacy ‘first-come, first-serve’ UK grid connection system. This process created a backlog with viable projects waiting up to 10 years; forming a barrier to entry for developers who lack pre-secured power capacity and slowing development progress.
The Government’s AI Opportunities Action Plan initiative is driving solutions to boost the delivery of data centres, for example through planning reform and accelerating grid connectivity across AI Growth Zones. Ongoing reforms in partnership with Ofgem and the National Energy System Operator (NESO) are working towards a new ‘first ready and needed, first connected’ approach; to allow the grid to remove unviable projects (which haven't secured land, have stalled planning, or don’t meet clean power requirements) and make way for viable and priority projects such as data centres.
AI Adoption and Workplace Requirements
A 2025 survey by McKinsey found that although 88% of organisations quote the use of AI within at least one business function, only 7% of these businesses have fully scaled their AI use. This suggests that business adoption still has some way to go. We can expect the continuation of talent recruitment and investment in digital strategies to bolster this proportion over time, but there are also several initiatives in place to grow AI prevalence in the UK, including The National Data Library and AI Skills Boost Programme. In London, the Inclusive Talent Strategy and £147.2m investment into skills reform will both feed AI upskilling.
As the AI industry matures and adoption grows, occupier demand will no doubt evolve. Occupier needs could be business-continuity focused (e.g. greater server capacity, faster connectivity, flexibility) and/or require elevated tech-enabled and collaborative spaces. This will demand continued innovation and change for office markets worldwide. London is well positioned as its buildings already have comparative physical, digital and cyber resilience – demonstrated by its ranking at number 11 in the WiredScore Global Cities Resilience Index.
Sector diversity will support broader market resilience
There are unknowns surrounding the trajectory for AI, however activities from a diverse industry-base should sustain London’s global appeal and resilience. London’s expansive business ecosystem will continue to generate employment growth in the coming years supported by the rising need to recruit tech talent.
Our latest forecasts for Inner London office-based employment expect positive growth each year to 2030, with the total number of jobs anticipated to be c. 196,000 higher than in 2025, by the end of the forecast period. Growth will be driven by the professional and technical sector (+86,600), tech, media, and telecommunications (+47,300), and admin and support (+34,900). Tech recruitment will feed into the growth of all these sectors, as businesses invest into digital and AI strategies and innovative subsectors create new roles requiring specialist tech skills.
Total office-based employment growth in inner London by sector
Conclusion
London’s Future: Driving Growth Across Real Estate
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London’s tech industry has gained a strong occupier foothold and become a crucial sector fuelling the market’s dynamism, adaptability, and resilience. There is no sign of a change in this trend, as London is at the centre of global innovations in AI; the current catalyst for technological development.
AI companies are bringing new occupier demands and an unprecedented speed of growth to the London market. But technological innovation is provoking structural market change, with broader outcomes than AI industry take-up alone, and the greatest impact will be felt in the leading global tech cities.
London’s legacy, flexibility, and occupier appeal continues to position it favourably to capture talent flows and office market demand from a diverse range of businesses; increasingly powered by the growth of tech and AI as strategic business priorities.
Read Part 1: The tech, infrastructure, and conditions shaping London’s AI landscape
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Andy Monighan
Head of Leasing Services, London
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