London’s next spatial strategy will shape the capital’s economic future for a generation. And it must get one thing absolutely right: planning not only for where people live, but for where they work.
Nowhere is this more critical than in the Central Activities Zone (CAZ), London’s globally significant business district and the beating heart of the UK economy.
The CAZ is not just another part of the city. Straddling nine central London boroughs plus the entirety of the City of London Corporation, it generates nearly half of London’s economic output and over 40% of its jobs, despite occupying a tiny fraction of its land. It is the capital’s commercial core, the place where businesses cluster, innovate and scale.
However, the conditions that allow it to perform this role are rapidly shifting. Between 2018 and 2023, central London lost 14 million sq ft of office space. Over the next five years, it faces an 11 million sq ft shortfall. The crunch is most acute at the top end of the market, which is experiencing record levels of demand. Availability of prime space is close to historic lows. Only a handful of large, contiguous floorplates remain across the whole of central London, at a time when businesses are actively seeking around 10 million sq ft of space.
This is important. Offices underpin the UK’s service‑based economy, which accounts for more than 80% of national jobs. In central London alone, office‑based activity in the City and Westminster generates over £200 billion in economic output every year. For every 100 office jobs, another 40 are supported in supply chains, and a further 18 in local high streets, sustaining the cafés, bars, restaurants and cultural venues that make central London thrive.
Failing to provide enough modern workspace risk eroding London’s global competitiveness, with investment and the benefits it brings, including jobs across the capital and country going to other global cities which are vying for business.
This modern workspace is not a luxury, it’s the foundation of London’s economic competitiveness. These buildings are where global firms choose to base their teams, invest in innovation and commit to the capital for the long term. They attract the anchor companies that bring high‑value, high‑skilled jobs into the city, the kind of roles that draw world‑class talent and keep London at the forefront of global business and innovation.
And when these firms choose London, they help to grow or contribute to entire ecosystems. A single major occupier can stimulate demand for specialist SMEs, tech and creative suppliers, legal, financial and a wide range of hospitality, retail and cultural venues. Hundreds of indirect jobs could flow from the presence of just one anchor business, supporting the diverse supply chains and neighbourhood economies that make central London vibrant and resilient.
This is why the quality of workspace matters just as much as the quantity. Modern, sustainable, flexible offices are the physical infrastructure that enables these ecosystems to thrive.
The Plan must safeguard and enhance commercial floorspace across the CAZ, particularly in the locations seeing the most demand. It should support densification of development, innovative design and with the highest sustainability credentials possible.
London competes globally for investment, and delays or uncertainty in the planning process can push businesses, and the high‑value jobs they bring, to more agile cities. A more responsive system, with clearer pathways for delivering high‑quality commercial space, would give developers and occupiers the confidence to invest at scale and at speed. Giving greater weight to the creation of world class new space which meets the needs of international businesses and headquarters would also reinforce London’s global appeal.
None of this diminishes the urgency of London’s housing crisis. The capital needs more homes, and the new London Plan must respond boldly. But it must also recognise something fundamental: housing and commercial space are not opposing forces, they are interdependent.
A thriving CAZ supports the jobs, investment and tax base that fund public services and underpin London’s ability to deliver new homes. At the same time, a well‑housed workforce strengthens the city’s labour market and helps sustain the very ecosystems that make central London attractive to global businesses.
A London Plan that underplays the importance of workspace in the CAZ risks constraining growth, weakening productivity and undermining the capital’s global standing. A Plan that recognises how homes and jobs work together, and plans confidently for both, will secure London’s long‑term prosperity.
So come on Mayor, Sir Sadiq Khan; we call upon you to recognise modern offices as critical economic infrastructure for London, just as data centres and gigafactories are deemed nationally.
