London stocks closed down on Wednesday with real estate stocks hitting over a month’s low after Jefferies said the capital city’s office market was in “rental recession” and Ithaca Energy gained on a UK nod for the Rosebank oil and gas field.

Land Securities, British Land, Derwent London and Great Portland Estates fell between 3.4% and 4.3% after the brokerage downgraded all the stocks.

London’s embattled office market is in rental recession as volumes of empty space across the capital’s West End, City and Canary Wharf business districts hit a 30-year high, Jefferies analysts said.

The broader real estate index fell 2.8% and is set for a 3.6% loss this quarter as the roll-out of flexible working policies for corporate employees has partly dented demand for huge office rental spaces.

More broadly, the large-cap FTSE 100 closed 0.4% down despite a 1.3% gain in heavyweight oil stocks. The firms gained as crude prices got a lift on supply concerns.

Midcap stocks ended 0.6% lower, overshadowing a 8.8% surge in Ithaca Energy after Britain gave the green light for one of its biggest new oil and gas projects in years despite opposition from environmentalists.

“It’s been a good day for UK oil and gas small cap Ithaca Energy after the UK government approved the development of the Rosebank oil field in Shetland,” said Michael Hewson, chief market analyst at CMC Markets.

“The approval… should help to improve the energy security of the UK.”

Among small-cap shares, Alfa Financial Software added 13.8% after the asset finance software firm confirmed it was in preliminary talks for an offer from U.S. private equity firm Thomas H. Lee Partners.

Glencore Plc added 0.4%. The miner said it will stop funding the loss-making Koniambo Nickel SAS (KNS) business it co-owns in New Caledonia at the end of February.