Prime office rents in Cardiff have risen by just over a third over the last two years, according to new research from property advisory firm Knight Frank. The city, however, faces a shortage of new grade A office stock, which is needed to attract new investors and support indigenous firms to expand.
Rent growth and market context
Knight Frank reported that the 34% rise in prime rents was nearly double the average 18% increase across the UK's 10 largest office markets outside of London. After remaining at £25 per sq ft for seven years, prime rents in the Welsh capital have risen to £33.50 per sq ft over the past 24 months, with only Leeds seeing a larger increase during that period.
While the overall vacancy rate for office accommodation in Cardiff stands at 12.1%, availability of grade A space fell to just 1.5% in the last quarter. Knight Frank forecasts that trend will continue, with no new-build developments currently expected on site and demand for the best office space remaining resilient.
Recent deals and take-up
The last major speculative office scheme in the city was the 1 John Street office development from JR Smart. The 115,000 sq ft building is now fully occupied by Lloyds on a ten year lease. Earlier this month, in one of the biggest office investment deals outside of London this year, the freehold interest was acquired by Pembrokeshire-based Second Horizon. The investment was marketed by Knight Frank with an asking price of £38.4m.
Prior to that was the office element of the Interchange scheme at Capital Square, which now serves as the Welsh headquarters of financial services firm L&G. In the first three quarters of 2026, there was 376,388 sq ft of take-up across 76 deals, putting Cardiff on track to exceed the city's long-term annual average of 460,000 sq ft. Nearly three-quarters (72%) of the total was in the city centre, with professional services occupiers particularly active in pursuing prime offices close to Central Station, including Acuity Law, Knights, and Ridge.
Future supply and refurbishments
Three major refurbishment schemes on the horizon in the city include the restoration of the Brains Brewery Building at Central Quay - subject to a funding deal - the full refurbishment of 4 Callaghan Square, and the repurposing of the former Howells department store by developer Thackeray as part of a scheme that also plans to provide hotel, apartment, retail and restaurant and bar space. Combined, these projects could add close to 300,000 sq ft to the city's office stock.
Knight Frank said prime rents could reach £35 per sq ft by the end of the year, while pushing closer to £40 per sq ft through Q1 (first quarter) 2027. Rightacres Property, which is refurbishing 4 Callaghan Square which is being vacated by Centrica, has planning for 160,000 sq ft 1 Central Quay office scheme south of Central Station, but will require a significantly higher rent and substantial pre-letting to become commercially viable.
Market outlook
Mark Sutton, office agency partner at Knight Frank Cardiff, said: "Prime office rents in Cardiff have held firm at £33.50 per sq ft in Q3, with quoting levels for the best space now reaching £37.50 per sq ft. The city's lack of stock means we expect prime rents to rise further through Q4 and into 2027. Incentives have remained stable but are tightening where availability is limited, particularly for prime space and larger or bespoke requirements."
Across the UK's regional cities, a similar pattern has been emerging in recent years. Prime space in the likes of Bristol broke through £50 per sq ft in 2025, now reaches £55 per sq ft and is still rising, after periods where new developments have been snapped up by active demand. Cardiff still trails these markets at a headline level, but it has momentum and, as rents rise, there is sustained demand and very limited availability of the best-quality office space.
"Landlord-delivered, fully fitted space is a growing trend in the Cardiff market recent years. Will there have ben fewer deals involving fitted accommodation than in other UK cities, as capital costs continue to rise, and tenants are generally less willing to commit to long-term leases, these fitted solutions become more attractive to occupiers. As a result, we are seeing more landlords opt to invest in delivering 'plug and play' space in return for higher rents and offsetting rent-free incentives."
Tom Griffiths, capital markets associate at Knight Frank Cardiff, added: "The movement in prime rents has been significant from a capital markets perspective. For the first time in years, viable rental growth is coming through on first-generation, grade A offices, driven by the lack of supply and a clearer path to higher headline rents. That's creating conditions where pre-lets on refurbishments are now realistic.
"The market is pointing in the right direction. Investors who previously struggled to make the numbers stack up are finding that rising rents, tightening incentives, and solid fundamentals in the city centre are making well-located assets in Cardiff an attractive proposition - and that can only be positive for investment in the city."
