Derwent London (LSE:DLN) and Great Portland Estates (LSE:GPE) are both central London office landlords and both FTSE 250 constituents. Since the Pandemic they have argued the same case: office Demand has not disappeared, it has concentrated on the best-quality, best-located buildings.

That is why office demand is worth watching through these two companies. Their results give a direct read on whether occupiers will still pay above valuers' estimates for modern, well-serviced space in the West End and nearby districts.

Their 2026 figures broadly support that case, but with different emphases. GPE has reported record leasing and rising asset values; Derwent has reported steady leasing alongside a £45.8m provision and a small fall in net asset value. This is an analytical explainer drawn from the companies' own announcements.

The London office debate in 2026

Hybrid working has reduced the space many employers need, while energy-efficiency rules, net-zero commitments and competition for staff have pushed occupiers towards newer buildings. The result is often called a "flight to quality": healthy demand for prime space, weak demand for secondary offices.

Views on where the market stands differ, with some market commentators arguing in May 2026 that sentiment may be too bearish on London offices, which is one reason leasing evidence from listed landlords carries weight.

A key term is estimated rental value (ERV): a valuer's view of the open-market rent a space could achieve. When new leases are signed above ERV, valuers may have been conservative and rental values may rise.

Derwent London: steady leasing, a one-off provision

Derwent London is a Real Estate Investment Trust (REIT) with a central London portfolio split between the West End and what it calls the "City Borders", the districts on the fringes of the City of London. Its financial year ends on 31 December.

Its interim results for the six months to 30 June 2026, published on 6 August, showed new lettings of £22.1m, signed 5.1% above December 2025 ERV. ERV grew 2.6% in the half (West End 3.2%, City Borders 1.4%), and the company maintained its 2026 ERV growth guidance of 4% to 7%. It also improved its 2026 EPRA Earnings guidance to a change of 0% to -3%, from -3% to -5% previously.

The notable charge relates to Old Street Quarter EC1. In 2022 Derwent exchanged a conditional contract to buy the freehold for £239m, with completion expected in late 2027 subject to vacant possession. Ahead of a planning application planned for early 2027, it updated its probability-weighted assessment of outcomes and recognised a £45.8m provision, which it will re-appraise at each set of results until acquisition.

Partly as a result, EPRA net tangible assets (NTA), a standard measure of underlying net asset value, fell to 3,157p per share from 3,225p at December 2025, and the group reported an IFRS loss before tax of £17.9m. EPRA vacancy, the share of rental value that is empty, rose to 4.4% from 4.1%. The portfolio was valued at £4,970.3m, with an underlying valuation decline of 1.3% excluding developments.

Capital allocation has shifted. Derwent completed £168.8m of disposals, cut loan-to-value (LTV) to 28.8% and launched a £50m share buyback, of which £18.1m was completed in the half; its announcement record shows purchases continuing into September. The Interim Dividend rose 2.0% to 26.0p.

Great Portland Estates: record leasing and Fully Managed space

GPE is a central London REIT with a financial year ending 31 March. It raised £350.3m through a rights issue in 2024 and has since expanded its "Fully Managed" offer, in which the landlord provides furnished, serviced offices on flexible terms.

Its results for the year to 31 March 2026 described record leasing of £70.9m, signed 10.3% above March 2025 ERV. Rental values grew 5.8%, the portfolio valuation rose 4.3% on a like-for-like basis to £3.0bn, and EPRA NTA increased 6.1% to 524p per share. EPRA LTV fell to 28.6% from 30.8%, and the dividend was 8.2p. Fully Managed commitments reached 654,000 sq ft, against a 1m sq ft ambition. GPE guided to ERV growth of 4% to 7% for the current year.

Momentum continued into the new year. Its first-quarter update reported £13.2m of leasing in the three months to 30 June 2026, 3.7% ahead of March 2026 ERV, with Fully Managed lettings averaging £245 per sq ft. On 24 September it announced Fully Managed pre-lets at City Tower, EC2 ahead of completion in early 2027.

Comparing two readings of office demand

On our reading, both companies point to resilient prime demand: each is leasing above ERV and both guide to similar rental growth. The difference lies in balance-sheet direction. GPE's NTA is rising as values recover and its development programme delivers; Derwent's fell in the half, driven partly by the provision and underlying valuation weakness, and it is recycling Capital into buybacks.

Leasing strength and valuation strength are not the same. Valuations also depend on investment yields, which move with interest rates and investor appetite, so a landlord can let well and still report valuation pressure.

Risks and dates to monitor

The shared risks are a weaker economy or a downturn in financial, technology or creative sectors, construction cost Inflation on development schemes, and higher interest rates lifting financing costs and valuation yields.

For Derwent, the Old Street provision will be re-appraised at each set of results. For GPE, the Fully Managed model brings higher operating costs and shorter leases, making occupancy in those buildings important. GPE's interim results for the half-year to 30 September 2026 and Derwent's full-year 2026 results are the next major reference points.

Why these two are a barometer

Derwent (LSE:DLN) and GPE (LSE:GPE) are not proxies for the whole UK office market; they deliberately own the kind of space in demand. That makes them a barometer for prime central London rather than for offices generally.

Both are still leasing above valuers' estimates. If that continues, the case that demand has concentrated rather than collapsed strengthens; if it slows, even the best space is not immune.