Knight Frank says prime office rents in Cardiff could approach £40 per square foot next year
Rental rates for prime office space in Cardiff have risen by just over a third in the past two years, new research from property advisory firm Knight Frank shows.
However, the city faces a shortage of new class A office stock, which is needed to attract new investors to the city and support indigenous companies to expand. While there is investment in upgrading existing office buildings, with high construction costs and debt, developers need prior approvals north of £40 per sq ft and closer to prime office rents in Bristol, to make speculative new office developments possible now.
Knight Frank said the 34% rise in prime rents was almost double the average 18% rise in the UK’s 10 biggest office markets outside London.
After remaining at £25 per sq ft for seven years, prime rents in the Welsh capital have risen significantly in the past 24 months to £33.50 per sq ft, with only Leeds seeing a bigger rise over the period.
While the overall vacancy rate for office accommodation in Cardiff stands at 12.1%, the availability of class A space fell by just 1.5% in the last quarter. Knight Frank predicts the trend will continue, with no new developments currently expected on the site and calls for the best office space still holding out.
In the first three quarters of 2026, there were 376,388 sq ft of take-up in 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 are in the city center, with prime offices active in Pursui, with prime offices active in Pursui. Law of Acuity, Knights, and Ridge.
The three major improvement plans on the horizon in the city are: the restoration of the Brains Brewery Building on Central Quay – subject to a funding agreement – the complete refurbishment of 4 Callaghan Square, and the repurposing of the former Howells department store by the developer Thackeray as part of a plan that also plans to provide hotel space, apartments, shops and restaurants and bars. 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 approaching £40 per sq ft by Q1 (first quarter) 2027.
Rightacres Properties, which is redeveloping the 4 Callaghan Square vacated by Centrica, has plans for a 160,000 sq ft office at 1 Central Quay south of Central Station, but it needs higher rents and substantial pre-lets to make it commercial.
Mark Sutton, partner of the office agency at Knight Frank Cardiff, said: “Prime office rents in Cardiff have held firm at £ 33.50 per sq ft in Q3, with quoting rates for the best space now reaching £ 37.50 per sq ft. The city’s lack of stock means that we expect prime rents to rise further through Q4 and the availability of incentives has been 2027. limited, especially for prime space and larger or special requirements.
“In the regional cities of England, the same pattern has emerged in recent years. The main space like Bristol broke £50 per sq ft in 2025, now it reaches £55 per sq ft and still rising, after some time new development has been driven by active demand. demand and availability of office space of the best quality.
“The space delivered by the landlord, in full, is a growing trend in the Cardiff market in recent years. There are fewer offers for suitable accommodation than in other cities in the UK, as the cost of capital continues to rise, and tenants are generally unwilling to rent long-term leases, this suitable solution is becoming more attractive to occupiers. for higher rents and balancing incentives without rent.
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 many years, vigorous rental growth is coming to first-generation, grade A offices, driven by a lack of supply and a clearer path to higher-end rents.
“The market is pointing in the right direction. Investors who previously struggled to make the numbers stack up are finding that rising rents, tight incentives, and strong fundamentals in the city center make an asset located in Cardiff a great proposition – and that can only be a positive for investment in the city.”