London Leads in Office Construction While NYC Drops
New data from CoStar Group highlights a widening divergence between office construction activity in London and New York City, with the gap reaching a record level in the second half of 2025. The figures underscore how the two global financial hubs are responding differently to evolving market conditions, shifting workplace trends, and changing developer strategies.
By the end of 2025, more than 16 million square feet of office space was under construction in London. In contrast, New York City’s pipeline stood at approximately 5.7 million square feet. This represents a difference of over 10 million square feet in London’s favor—the largest gap recorded in more than two decades. The data signals a notable reversal from earlier years when New York frequently led global office development activity.
The divergence becomes even more striking when viewed over a longer time horizon. In 2018, New York City’s office construction pipeline was more than double that of London, reflecting strong pre-pandemic demand and a robust development cycle. However, since that peak, construction activity in New York has declined sharply. By the end of 2025, the city’s development pipeline had fallen to one of its lowest levels of the century, indicating a significant slowdown in new project starts.
London, on the other hand, has demonstrated a more stable pattern of development in recent years. Since early 2022, office construction volumes in the city have generally remained within a range of 16 to 17 million square feet. Prior to that period, it was more common for volumes to fall below 14 million square feet. This relative consistency suggests that developers in London have maintained confidence in the long-term demand for office space, even as global work patterns continue to evolve.
One of the key factors contributing to the slowdown in New York is a shift in developer behavior. While demand for high-quality, premium office space—often referred to as “trophy” assets—remains strong, developers have become increasingly cautious about initiating speculative projects. Instead of building without secured tenants, many are now requiring substantial pre-leasing commitments before moving forward. This more conservative approach reflects broader uncertainty in the office market, driven by hybrid work models, changing tenant preferences, and economic considerations.
Despite the decline in construction activity, leasing demand in New York has shown signs of resilience. In 2025, the city recorded 59 office leasing deals larger than 100,000 square feet, totaling more than 14 million square feet. This represents the highest level of large-scale leasing activity since 2019, indicating that while new development may be slowing, demand for well-located, high-quality office space remains intact.
The contrast between London and New York also reflects differences in market structure and development dynamics. London’s office market has continued to attract investment, particularly for modern, sustainable buildings that meet evolving environmental and workplace standards. Developers in the city have been more willing to proceed with projects, supported by strong interest from global investors and a steady pipeline of tenants seeking upgraded office environments.
In New York, however, the market has been more cautious, with developers focusing on minimizing risk. The emphasis on pre-leasing means that new construction is closely tied to confirmed tenant demand, rather than speculative expectations. While this approach reduces the likelihood of oversupply, it also limits the volume of new projects entering the pipeline.
Looking ahead, the current gap between the two cities may not persist indefinitely. Early data for the first quarter of 2026 suggests that office construction activity in London is beginning to moderate. For only the third time since 2021, the volume of space under construction has dipped below 16 million square feet. Analysts expect this downward trend to continue through 2026 and into 2027, potentially narrowing the gap with New York.
This anticipated decline in London’s pipeline could reflect a combination of factors, including the completion of existing projects, tighter financing conditions, and a more cautious outlook among developers. As these dynamics play out, the city’s construction levels may move closer to those seen in New York, reducing the current disparity.
At the same time, New York’s office market could see a gradual recovery in development activity if economic conditions improve and tenant demand remains strong. The continued strength of large leasing deals suggests that there is still appetite for office space, particularly in premium locations. If confidence returns, developers may become more willing to initiate new projects, especially those aligned with modern workplace requirements.
Overall, the data from CoStar highlights a period of transition for global office markets. While London currently leads in construction activity, and New York has experienced a notable slowdown, both cities are adapting to a changing landscape shaped by new work patterns, economic uncertainty, and evolving tenant expectations.
The record gap observed in 2025 serves as a snapshot of these shifting dynamics, illustrating how two of the world’s most important office markets are navigating similar challenges in different ways. As the market continues to evolve, the balance between supply and demand, along with broader economic trends, will play a crucial role in determining the future trajectory of office construction in both London and New York City.
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