Office properties in the UK are selling at the steepest discounts since the global financial crisis, with many buyers securing deals nearly 20% below the original asking prices.

This marks the largest shortfall since 2009, highlighting the sluggish demand for older, less sustainable office buildings in the current market.

According to data from property analytics group CoStar, office buyers this year have, on average, paid 18% less than the listed prices. This decline reflects a sharp contrast to the office market’s peak around a decade ago when properties often sold at or above asking prices. As recently as 2019, it was common for landlords to achieve their desired sale prices.

One notable example is 140 Leadenhall Street in the City of London, which was listed for around £30 million but sold in June for closer to £20 million. Similarly, Oxfam House in Oxford, the charity’s UK headquarters, was expected to fetch £60 million but sold for just £37.1 million. In Leeds, the 6-7 Park Row property, which was on the market for two years, finally sold for just over £8 million, far below its initial £20 million asking price.

The UK office market has been sluggish for several years, largely due to the impact of rapid interest rate increases, which have inflated financing costs and depressed property valuations. Uncertainty surrounding the role of office spaces in the post-pandemic world of hybrid working has further dampened demand, particularly for older buildings.

While there is growing interest in “best-in-class” offices—modern, eco-friendly buildings equipped with state-of-the-art amenities—finding tenants for secondary, older offices has become increasingly challenging. CoStar’s data reveals that 8.3% of all UK office space is currently vacant, the highest rate in 11 years. Much of this empty space is in older buildings located on the outskirts of towns and cities.

Property agents suggest that some landlords are willing to accept lower offers because they cannot afford the extensive refurbishments needed to meet the rising standards expected by tenants. Opportunistic buyers looking to renovate and resell these secondary offices must negotiate hard to ensure their investments are viable, particularly outside London.

Although financing costs have recently decreased and valuations are stabilising, the market remains sluggish. Even “grade A” offices, which are typically easier to sell, are facing challenges. Derwent, a prominent London office owner, recently withdrew a building on Whitfield Street from the market after receiving offers that, while reasonable, did not meet expectations.

Paul Williams, CEO of Derwent, acknowledged the subdued market conditions, noting that the high cost of debt has been a significant factor. He expressed cautious optimism following the recent interest rate cut, saying, “It was good to see the first cut last week and it looks like more cuts are coming. We’re seeing a few more assets put on to the market.”