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The resurgence of prime city-centre offices: a global recalibration in commercial real estate

Kinexio

25 July,2025

1 min read

While headlines over the past few years have centered on the “death of the office,” a more nuanced and powerful story is emerging in key global cities: the resurgence of prime office space in central business districts (CBDs).

From London to Milan to Helsinki, demand for centrally located, high-spec office buildings is outpacing peripheral markets-both in rental growth and investor activity. According to data from Savills, FT.com, and CRES Technology, prime CBD rents are rising at more than double the rate of non-central locations, signalling a decisive recalibration of value in the post-pandemic office landscape.

Amid widespread reductions in office footprints and the continued shift to hybrid work, investment in CBD office deals fell to €26 billion in 2024, a 25% year-over-year decline. Meanwhile, capital for suburban and secondary office assets has all but disappeared. The message from the market is clear: even prime locations are feeling the pressure, and quality alone may no longer guarantee resilience.

Flight to quality and centrality

The trend is driven by what industry analysts are calling a “flight to quality.” Occupiers are not abandoning the office-they’re becoming more selective, prioritising centrally located buildings that deliver premium amenities, ESG credentials, and long-term flexibility.

In London, prime West End rents rose 12% year-on-year, driven by demand from financial, legal, and tech firms looking to upgrade into smart, sustainable buildings. In Milan, Porta Nuova continues to command record-breaking prices for Grade A space, while in Helsinki, new CBD developments are being pre-leased months ahead of delivery.

Peripheral business parks and outdated suburban campuses, by contrast, are facing growing vacancies, rent stagnation, and declining valuations.

Repricing the office market

The divergence in performance between prime and secondary office assets is reshaping investor strategies. CBRE and JLL report that while overall office investment volumes were flat globally, CBD office deals surged in both volume and value.

ESG and smart infrastructure driving demand

Another key driver of the CBD office resurgence is the growing importance of ESG standards in both corporate leasing decisions and investor mandates.

Buildings that are net-zero-ready, WELL-certified, or digitally optimised are commanding significant premiums and lease-up velocity. In response, developers in core urban markets are doubling down on retrofits, smart energy systems, and tenant-experience technology.

According to Fortune Business Insights, the Europe smart building market size was valued at USD 6.36 billion in 2024. The market is projected to grow from USD 7.70 billion in 2025 to USD 26.40 billion by 2032, exhibiting a CAGR of 19.3% during the forecast period.

These features are particularly critical for firms balancing hybrid work models. Tenants want data-rich environments that can support occupancy planning, safety protocols, and employee wellbeing.

The urban advantage

Beyond quality, CBDs offer something peripheral offices cannot replicate connectivity, culture, and community. Proximity to transit, restaurants, entertainment, and cultural institutions gives city-centre offices a lifestyle edge that appeals to the post-pandemic workforce.

This appeal is especially strong among younger professionals, who increasingly view office attendance as an extension of their social and professional identity.

This has sparked a wave of mixed-use redevelopment in urban cores, blending workspaces with residential units, public plazas, and retail experiences-further reinforcing the pull of the city centre.

Kinexio's take: Data-driven decisions in a polarised market

At Kinexio, we’re helping real estate owners, investors, and occupiers navigate this rapidly polarising office market. Our platform integrates real-time leasing trends, building performance data, and ESG benchmarks to identify which assets are outperforming, which are at risk, and where opportunities are emerging.

In this climate, decision-making must be both strategic and granular. For asset managers and occupiers alike, the message is clear: prime is outperforming, and differentiation is accelerating.

Looking ahead: core cities as long-term winner

As global cities recover their economic momentum, CBD offices are positioned not just to rebound but to lead. The convergence of sustainability, urban living, and high-performance workspace is breathing new life into city centres.

While the overall office sector faces a period of recalibration, prime urban buildings are emerging as durable, income generating assets in an otherwise cautious investment climate.

In an era defined by uncertainty and change, one truth is becoming increasingly clear: centrality and quality are the cornerstones of office resilience.

Kinexio remains committed to empowering the real estate ecosystem with the tools and insights needed to navigate this new chapter. Whether you’re repositioning a portfolio or selecting your next office location, we provide the clarity to act decisively in a market that rewards precision.

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