London AI office lettings rise tenfold in a year as cluster hardens

TL;DR:

• AI companies leased more than 450,000 sq ft of London office space in April 2026, against an average of 40,000 sq ft across 2025 — a step-change in the physical footprint of the UK AI cluster.
• Almost half the deals were in the King’s Cross-Euston “Knowledge Quarter”, where DeepMind, Google, Meta and Microsoft already cluster around Cambridge transport links and university recruiting.
• The numbers offer a counterpoint to the “AI is a London bubble” framing — CoStar’s market analyst calls it “a graduation moment”, and a separate City Hall report has put a million London jobs in the path of AI exposure.

The CoStar data are the clearest UK-specific demand signal for AI-cluster commercial property published this year. Between April 2025 and March 2026, monthly AI-company lettings rose from under 50,000 sq ft to 250,000 sq ft. Last month’s 450,000 sq ft is a further jump on that trend, and CoStar’s senior director of market analytics Patrick Scanlon says “this isn’t looking like a bubble”.

The Knowledge Quarter consolidates

The geographic concentration matters as much as the volume. Almost half of last month’s lettings clustered in the area around King’s Cross and Euston stations, anchored by Alphabet’s DeepMind division and complemented by Google, Meta and Microsoft offices. Microsoft’s recent 100,000 sq ft lease of Film House in Soho is the highest-profile recent deal, but the deeper story is in the Knowledge Quarter’s pull on smaller AI firms that need fast access to Cambridge research talent and venture capital.

UK angle: commercial property as policy signal

For the UK government’s AI Opportunity Action Plan, the lettings figures provide a measurable indicator that the AI Growth Zones are not the only physical-infrastructure story. London’s vacancy rates remain higher than pre-Covid levels overall, but Scanlon notes that supply of “really good quality buildings with appropriately large floor plates is quite low” — the same constraint the Knowledge Quarter cluster has been pushing into Microsoft’s Soho move and toward Old Street and Farringdon.

Looking forward

Two questions follow from the data. First, whether the cluster will hold its London-centric pattern or begin to spread to the North East AI Growth Zone, where £10 billion of QTS/Blackstone data-centre investment is underway. Second, whether the office-leasing surge converts into headcount rather than land-banking — a question that property-market data alone cannot answer, and one that the next Office for National Statistics tech-employment release will be the first to test.