By Mike Hook, LMG

Published on: 8 July 2025

London’s commercial property market is being squeezed from all sides forcing landlords to juggle rising tenant demands, shifting investment trends and looming compliance deadlines. As a result, many are rethinking what it means to be a landlord in a market where space alone is no longer enough to seal the deal.

What’s emerging is a new trend that focuses less on landlords managing buildings and instead, creating spaces that deliver service-driven, digitally enabled workplace experiences. The question, for many, is what’s driving this and what to do next?

First and foremost, this change is being driven by tenants. In a world where working from home has become an all-too-comfortable option, many occupiers are now looking for collaborative, interactive spaces that offer a superior experience to WFH and can entice people back to the office. That means flexible, sustainable workplaces – designed with wellbeing in mind and endorsed with the WELL or NABERS UK stamp of certification – that provide spaces that people want to be in, not have to be in.

This change in direction is so marked we’re already starting to see tenants voting with their feet and walking away from buildings that can’t meet the standards they need.

As a result, this is having a knock-on effect on investors, who are increasingly directing capital toward portfolios that tick the right boxes on ESG performance, digital readiness and long-term resilience. Properties that lag behind are starting to lose their shine, with investors growing cautious about backing assets that seem increasingly out of step.

And then there’s the regulatory side of things, most notably the Minimum Energy Efficiency Standards  (MEES) and its fast-approaching 2030 deadline. This may not be as telling as the pressure from market forces, but it is there nonetheless. Landlords who aren’t already planning for compliance could find themselves scrambling to make last-minute, costly upgrades.

Why digital change matters now

Any one of these challenges would be tough on its own. But together, they’re forcing landlords to rethink how they operate. And what’s becoming increasingly clear is that landlords today aren’t just managing physical assets. They’re delivering service experiences.

That means embracing smart technologies that monitor and optimise energy use, air quality and occupancy. It means offering spaces that are flexible and customisable. And it means creating workplaces that are not only compliant but healthier, more sustainable, and more productive than the home office.

In other words, it’s about moving from landlord-as-asset-manager to landlord-as-service-provider.

But making the decision to move from simply offering space – to one that focuses on a service-led, digitally enabled experience – is not going to happen overnight. Our research found that when it comes to investment, 70% of landlords are worried about the economic backdrop. At the same time, over half of property owners (52%) are stymied by the technical complexity of it all.

And yet, despite these headwinds, there is an appetite for change. Two-thirds (66%) are shifting towards the flexible workspace market, and over a third (36%) are introducing green leases. Even so, for plenty of mid-tier players, this journey is still only just beginning. And without the right digital approach, the risk of falling behind is real.

The challenge for mid-tier landlords

The big players – companies like British Land and LandSec – are already on their journeys. They’ve got the teams, the strategies and the resources in-house to create digital standards and drive change from within.

But for the mid-sized, multi-tenant landlords across the City and West End, it’s a tougher ask. They know they need to adapt, but they often lack the in-house expertise or specialist teams to make it happen smoothly.

That’s where the right partner makes all the difference. For these landlords, having expert support isn’t just helpful, it’s essential. It’s the difference between patching together piecemeal fixes that waste time and money, or moving with purpose to deliver the kinds of digitally enabled, service-focused, certified buildings that tenants and investors are now demanding.

Against this backdrop, there is, perhaps, an even greater threat that I have yet to mention. Time. This isn’t a problem to put off until tomorrow. Every year of delay chips away at competitiveness, shrinks tenant appeal and erodes long-term value. Buildings that were expected to last 20 or 30 years could become obsolete in less than a decade if they’re not ready for a digital future.

In today’s market, the dividing line is clear. Landlords who keep thinking of themselves purely as space providers are going to struggle. Those who embrace the shift to digital, service-led, tenant-centred, ESG-compliant spaces  are the ones who will shape the next chapter of London’s commercial real estate story. It’s not a question of “if” landlords take the plunge. It’s “when”.