The London Office Lease Regear Trap: Why 39% of City and West End Deals Are Now Renegotiations — and Why Six Months Out Is Already Too Late

Market Insights  ·  By Martin Levy  ·  14 May 2026

A finance director walked into my office a fortnight ago with a letter from his landlord. Polite, well-mannered, the kind of letter solicitors write when they want you to think they’re doing you a favour. The lease at his firm’s 40,000 sq ft City building runs out in late 2028. The landlord — through a full-service agent who, by the way, also has a letting instruction on a competing scheme half a mile north — was proposing what they called a “constructive early dialogue.” A regear. Sign now, save the disruption of a move, lock in the team’s existing commute, get a refurb thrown in. They’d even drafted Heads of Terms. All very civilised.

The FD wanted my view in fifteen minutes. He got an hour, because the answer to whether you should regear or move is rarely the answer the landlord’s agent has already written down for you.

I’m writing this in mid-May. The reason that conversation was happening at all — the reason it’s now happening across boardrooms in the City and the West End almost weekly — is that the London office market has done something quiet and structural over the last eighteen months that most occupiers haven’t fully absorbed: the London office lease regear has gone from a niche manoeuvre to the dominant transaction type. The numbers tell the story.

Four in ten London office deals are now regears, and the number is climbing

According to Knight Frank’s The London Equation, published 5 February 2026, 39 percent of London office transactions are now in-place regears, with 1.7 million square feet under negotiation. Forty-six percent of occupiers needing more than 100,000 sq ft are expected to stay put. Twenty-five percent of those needing under 40,000 sq ft, the same. And 65 percent of occupiers with lease expiries running to 2030 are expected to be supply-constrained — meaning they will not have the option, when the time comes, to move to the building they would actually prefer.

That last figure deserves a second read. Two thirds of every lease event in London between now and 2030 is going to land into a market where the tenant cannot get what they want. Not “won’t get the best price.” Won’t get the building.

Why? Because the cupboard is bare. Vacancy for new, high-specification stock is 0.3 percent in the City Core and 0.8 percent in the West End Core (Knight Frank, February 2026). Roughly 50 million square feet of London office leases will expire by 2030, against just 10 million square feet of speculative space under construction across 2026-29 — about 1.7 years of average take-up against five years of expiries. The arithmetic doesn’t work, and tenants, slowly, are working out that it doesn’t work.

Tenants aren’t choosing to stay — the market is choosing for them

Here is the part the landlord-side narrative tends to soften. The regear wave is not, by and large, a happy story about loyal occupiers rewarding loyal landlords. It is the consequence of a supply squeeze playing out in real time.

Take EY. On 13 January 2026, the firm announced it had recommitted to 1 More London Place — around 35,000 square metres, just under 400,000 sq ft — through to 2040. What the press release did not lead with, but the trade press confirmed, is that EY had spent the previous year hunting for around half a million square feet of alternative space and had abandoned the search. They didn’t regear because they wanted to. They regeared because, having looked at every credible alternative in the City, the alternatives weren’t there.

Macquarie, reported in January 2026 to be recommitting to its c. 220,000 sq ft at 25 Ropemaker Place, EC2 ahead of a 2030 expiry, ruled out City and Canary Wharf alternatives — citing fit-out costs and the absence of scalable space (CoStar, January 2026). At 30 Gresham Street, EC2, the landlord JV (Wing Tai / Manhattan Holdings, asset-managed by Oxygen) regeared a single building’s worth of tenants in August 2025: Investec at around 150,000 sq ft, Rathbones at 110,000, Commerzbank at 80,000, all on reversionary leases through to 2035-2038, all with landlord-funded refurbishment to follow. Three serious occupiers, one building, one summer. None of them, at the point that conversation began, in a position to walk.

Set against the regearers, the tenants who did move tell their own story. HSBC halved its footprint moving to Panorama St Paul’s. Linklaters is heading to 20 Ropemaker but at roughly 25 percent less space than it has today. Clifford Chance is leaving Canary Wharf for a smaller floorplate at GPE’s 2 Aldermanbury Square. The pattern: when tenants are moving, they’re often moving smaller. When they’re staying, they’re staying because the floor they’d actually want to move to is already someone else’s.

Avison Young put it dryly in February: occupiers haven’t had the option to secure the space they need within the timeframe required.

Regear vs lease renewal: not the same thing, and the difference matters

A lease renewal under the Landlord and Tenant Act 1954 is a defined statutory process. A regear is not. It sits between a 1954 Act renewal and a contractual extension — a wholesale commercial renegotiation, structured as either a deed of variation or, more commonly when anything material is changing, a surrender and regrant. The two routes look identical on a board paper. In law they are not the same animal.

A surrender-and-regrant means a brand-new lease replacing the old one. It can be triggered automatically — sometimes accidentally — simply by extending the term or adding to the demised premises. The consequences are unforgiving. Your contracting-out under the 1954 Act has to be re-done, properly, with the right declarations and the right timing. Stamp Duty Land Tax may bite again on the new term. An older lease granted before 1996 will lose its original-tenant liability protection for the landlord but, in doing so, can land the new tenant with exposures the old lease never carried. None of that gets fixed afterwards. It gets resolved at heads-of-terms stage, or it doesn’t get resolved at all.

And then there is the live development that not enough occupiers have on their radar yet. The English Devolution and Community Empowerment Act 2026 received Royal Assent on 29 April 2026 and bans upwards-only rent reviews in new business tenancies in England and Wales. The ban does not commence until secondary legislation lands — expected no earlier than 2027 — but here is the trap: it applies retrospectively to leases granted under any “tenancy renewal arrangement” entered into on or after 17 March 2026. A reversionary lease agreed before that date is protected. One agreed today, before commencement, is not.

Landlords have responded by pushing for higher day-one rents, fewer incentives, more stepped or fixed uplifts, shorter terms and more break rights (Clyde & Co, April 2026). Which means the regear heads of terms a tenant signs in May 2026 look meaningfully different — and meaningfully worse on a present-value basis — to the ones they would have signed in February. If your adviser hasn’t talked you through that distinction by now, you have the wrong adviser.

Eighteen months out is preparation. Six months out is capitulation.

Here is the rule I’d put to any tenant with a London expiry between 2027 and 2030: the negotiation starts 18 to 30 months out, or it starts on the landlord’s terms.

Section 25 and Section 26 notices under the 1954 Act can be served between 6 and 12 months before expiry. Whoever serves first sets the agenda. By the time most occupiers think to pick up the phone, the landlord has already taken its strategic position, the alternatives in the market have been pre-let to someone else, and the only question left to negotiate is the size of the concession on a deal whose shape is already drawn. Genuine relocation lead times can run to four years end-to-end.

Six months is not a negotiation. Six months is a signature.

Eighteen to thirty months out, by contrast, you can do the work that actually moves the price. Tour real alternatives — properly, on the ground. Stress-test the regear proposal against a cost-and-disruption model that includes London fit-out at today’s c. £500 per square foot (Turner & Townsend confirms London is the most expensive global fit-out market — up roughly 50 percent from £300-£350 per sq ft in 2021), dilapidations, double-running costs, IT migration, and downtime. Build a credible threat to leave that you can walk away from on a Tuesday. Use it.

That is the work. There isn’t a shortcut, and the landlord knows there isn’t. For tenants who want a structured way through it, that is what our commercial lease consultancy practice is built around — a programme of work that begins long before the heads of terms arrive.

Sometimes staying is right. Sometimes it isn’t.

A regear can be the cleanest, most cost-efficient outcome — particularly where the building is genuinely fit for the next ten years, where the landlord is willing to fund proper capex, and where the alternative would mean writing a £10 million cheque just to be in a slightly different postcode. EY’s regear was sound because they had hunted 500,000 sq ft and abandoned the search. They knew what wasn’t there. Most occupiers signing regears today have not done that work. They have taken the landlord’s word, or their full-service adviser’s word, that the alternatives wouldn’t stack up. That is not analysis. That is acquiescence dressed up as strategy.

And there are moments when staying is plainly wrong. Where the building has reached the end of its economic life and the landlord won’t fund the capex. Where the MEES and EPC trajectory means the asset’s cost base is going to rise faster than its rentable ceiling. Where you are genuinely contracting, like HSBC, and a regear would mean paying for floors you don’t need. Where the right strategic answer is to consolidate offices or chase a different talent catchment. None of those answers come out of a heads-of-terms letter from a landlord. They come out of a separately commissioned, tenant-side piece of analysis done before the letter arrives.

Why a tenant-only adviser sees a regear differently

Knight Frank described regears in February as “an increasingly key structural feature of the London market.” That’s the right phrase. It’s also the reason this matters more to a tenant than it has at any point in my forty years in the business.

When I look at a regear proposal, I am looking at it for the tenant and only for the tenant. The Levy Group London does not act for landlords. We are tenant-only — full stop, no carve-outs, no in-house letting instructions sitting one floor up. The reason I lean on that distinction here is not marketing. It is the structure of the conflict. A full-service agent advising a tenant on a regear is, by definition, also taking instructions from landlords elsewhere in the same market — sometimes the same landlord, sometimes the building two streets over. They cannot honestly tell you that the regear in front of you is a worse deal than the one available next door, because the deal next door is one of theirs. I can.

That is the whole job. Read the proposal. Test it against the alternatives. Tell the tenant what it’s actually worth. Negotiate on that basis. And, when the answer is that the regear is the right deal — because sometimes it is — sign it on terms shaped by the tenant’s commercial reality rather than the landlord’s drafting preferences.

The finance director who walked in a fortnight ago is not signing his landlord’s heads of terms. He’s not rejecting them either. He’s running the analysis we should have been running anyway, eighteen months before his expiry — the analysis that turns a regear from a trap into a choice.

If your lease event is anywhere between now and 2030, that is the work that needs to start this quarter. Not in 2027. Not when the Section 25 lands. Now.

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The Levy Group London — Trusted, Valued, Respected. Independent commercial lease consultancy for London tenants, led by Martin Levy. Over 40 years of experience. More than 500 completed projects. 100% tenant-only — always.

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Sources

• Knight Frank, The London Equation, 5 February 2026 — knightfrank.co.uk
• Savills, Central London Office Market Watch — Q1 2026 — savills.co.uk
• Avison Young, Central London Office Analysis, Q4 2025, 5 February 2026 — avisonyoung.co.uk
• EY, EY UK extends lease at 1 More London Place, 13 January 2026 — ey.com
• Property Week, Landlords regear leases on 350,000 sq ft of City offices at 30 Gresham Street, August 2025 — propertyweek.com
• CoStar, Office regears playing increasingly central role in London market, 5 February 2026 — costar.com
• Clyde & Co, Upwards-only rent reviews outlawed: what this means, April 2026 — clydeco.com
• Turner & Townsend, Typical office fit-out costs — what to expect in 2026 — turnerandtownsend.com