AI takeover: Tech firms spark property frenzy with tenfold leap in London office demand

The amount of office space leased by artificial intelligence (AI) firms in London has exploded over the past year, figures from real estate analysts CoStar show. Last month, companies creating AI models leased more than 450,000 sq ft of office space, a stark contrast to the 40,000 sq ft monthly average in 2025. This dramatic rise represents a more than tenfold increase. 

Patrick Scanlon, CoStar's senior director of market analytics, described it as a pivotal moment. "It's almost a graduation moment in terms of offices for the sector," he said, adding: "This isn't looking like a bubble."

Tech giants plant their flags

The boom is being driven by some of the biggest names in the industry. Anthropic, an AI safety company, leased 158,000 sq ft near Euston, with space for 800 employees. OpenAI, the firm behind ChatGPT, secured its first permanent UK headquarters with an 88,500 sq ft lease in King's Cross. They are joined by data company Databricks and Microsoft, which also took huge spaces in Fitzrovia and Soho respectively. 

In total, AI-related companies have leased over one million square feet of office space in London since the beginning of 2025, with the pace rapidly accelerating this year.

The rise of the 'Knowledge Quarter'

A clear trend is emerging with firms clustering around King's Cross and Euston, an area dubbed the "Knowledge Quarter." The location offers excellent transport links, including to Cambridge, and proximity to London's own world-class universities. According to Scanlon, establishing a base here is also a powerful statement. 

"The idea of an office as a physical representation of your brand never went away," he explained. "A lot of these guys want a presence in King's Cross to show they're here to stay."

A city transformed

This intense demand is having a significant knock-on effect. While overall office vacancy is higher than pre-pandemic, the rate for "really good quality buildings... is quite low", Scanlon noted. Prime office vacancy in both the City and the West End has reportedly fallen below one per cent. 

The growth comes as a City Hall report found at least a million London jobs were "highly or significantly exposed" to AI's impact, highlighting the technology's dual role as both a creator of new hubs and a disrupter of the existing workforce. And the demand continues to build, with Scanlon confirming "a lot of latent demand from AI firms in the market."

London's global appeal

The capital's ability to attract these firms is no accident. London has excellent access to skilled labour, venture capital, and the ability for companies to cluster around knowledge centres. The city is reportedly home to more than 20,000 engineers with AI expertise, more than double any other European city. 

Data from advisory firm CBRE shows AI companies accounted for 34% of tech sector office take-up in 2025, a dramatic increase from just 4% in 2015. Looking ahead, the firm forecasts this could reach an astonishing four million sq ft by 2033.

With its deep talent pool and access to capital, London is cementing its position as a global hub for the AI revolution. As these companies establish major headquarters, their growing presence is not just reshaping the city's workforce but its very skyline.