The Digital Square Mile: how the City’s landlords are beating digital obsolescence

• Quality supply in the City is now historically scarce: the Grade A tower vacancy rate has fallen to just 1.9%, with active demand up 72% on the long-term average, increasingly driven by AI occupiers and AI-reliant occupiers more broadly.
• City of London buildings already outperform wider London on technological resilience, particularly on mobile provision (+13 percentage points) and, among new developments, cybersecurity (+6 percentage points).
• As occupiers increasingly choose to stay and regear rather than relocate, the onus is shifting to landlords to use these renewal moments to invest in resilience, or risk obsolescence once market conditions ease.

The City of London’s office market is entering a new phase of scarcity, specifically when it comes to availability of Grade A space. City-wide take-up reached 2.58 million sq ft in H1 2026, down 18% on H1 2025, yet the market has become sharply polarised: the Grade A tower vacancy rate has fallen to just 1.9%, and City Core vacancy now sits at 5.9%, 220 basis points below its ten-year average. Prime rents have risen 19% year-on-year to £116.73 per sq ft, while active demand is up 72% on the long-term average, a gap increasingly explained by the rise of AI.

AI occupiers is fast becoming a distinct category of demand. AI firms leased 0.7 million sq ft across Central London in H1 2026 alone (more than double the whole of 2025) with a further 290,000 sq ft of active requirements still in the market. In the City specifically, Tech & Media has grown to account for 20% of take-up, in a market historically dominated by Insurance & Financial Services.

But the pressure this trend is placing on buildings extends well beyond dedicated AI companies. AI adoption across UK businesses has nearly tripled since 2023, rising from 12% of businesses having adopted it to 35%. The operational burden this creates is widening.

This shift is prompting the industry to formally rethink what quality office space means. The British Council for Offices is piloting a new grading system, after finding that fewer than 3% of professionals support the traditional Grade A/B classification. The proposed 100-point scoring matrix retains established measures of physical quality, sustainability and amenity, but its most significant departure is the introduction of technology as a distinct category, assessed through building management systems and, notably, a WiredScore rating.

This addition is significant. Under the traditional Grade A/B system, a building’s technological capability was never measured directly, rather it was simply assumed on the strength of a building’s age or finish. The new matrix scores it explicitly, on equal footing with the criteria that have long defined office quality. The result is a new four-tier structure (Prime, Grade A, Grade B and Grade C) in which a building’s digital and cyber credentials are no longer inferred, but assessed on their own terms.

Within this new framework, City of London buildings already demonstrate a measurable advantage. In its Global Cities Resilience Index, 2026, WiredScore defines technological resilience as encompassing three pillars: digital resilience, physical resilience and cyber resilience.

WiredScore data shows the City outperforms the wider London market on technological resilience overall, with digital resilience the most notable strength: in-building mobile provision runs 13 percentage points ahead of wider London, and fixed internet provision 4 points ahead. New developments in the City also outperform wider London on cybersecurity resilience, by 6 percentage points.

This advantage, however, is not evenly distributed. Underlying data shows resilience performance varies significantly across individual buildings within the Square Mile – a reminder that the City of London is not a single, uniform market, but a collection of assets at differing levels of readiness.

None of this is abstract. Smart, connected buildings can already command rental premiums of up to 7.3%, and Grade A rents are forecast to rise by an average of 5.7% a year over the next five years, against a backdrop of persistent scarcity. As AI reshapes both occupier demand and the tools available to landlords, technological resilience is no longer a differentiator at the margins. It is fast becoming the basis on which office quality and value is judged.