Contents

• Across the Central London market

• The rise of Fintech in London

Across the Central London market

Following two consecutive months of take-up totalling over 1.2m sq ft, leasing activity in May returned to levels more similar to earlier in the year, with 544,726 sq ft completing across 43 transactions. This can largely be attributed to a lower level of larger deals completing compared to the previous two months. However, due to the significant amount that completed earlier in the year, YTD take-up currently stands at 3.5m sq ft, 11% higher than where it stood at the same time in 2024, and just 2% below the ten-year average.

The largest deal of the month saw medical research charity LifeArc pre-let the entirety of AshbyCapital / Native Land’s Kova KX, 105 Judd Street scheme (62,500 sq ft) on confidential terms. This month also saw the pre-let of the whole (62,500 sq ft) of GPE’s 30 Duke Street, W1, by Clayton, Dubilier & Rice (CD&R), bringing the total number of 50,000 sq ft+ transactions in the West End to the highest level since 2019. In the City, the largest transaction saw GlobalData lease the third floor (29,430 sq ft) at 100 Victoria Embankment, EC4, for a low passing rent of £27.00 per sq ft.

The Insurance & Financial Services and Banking sectors continue to dominate leasing activity following significant acquisitions of space in recent months by the likes of Squarepoint Capital, State Street, and American Express, and accounts for a combined 42% share of take-up so far this year. In fact, the total sq ft acquired by these sectors is at the highest level for a Jan-May period since 2010. Also of note is the continued strength of the Serviced Office Provider sector, which accounted for two of the City’s three largest deals this month, and so far, this year has seen the highest number of 25,000 sq ft+ transactions complete since 2018.

The City’s vacancy rate saw a 20 bps decrease to 7.0%, the lowest since October 2020, while the West End vacancy rate recorded a 20 bps increase due to a notable uptick in Grade B space being brought to the market, largely in fringe areas. This resulted in the overall Central London vacancy rate remaining at 7.1% for the third consecutive month.

In spite of the continued market uncertainty, the outlook for demand appears strong. Both markets recorded an increase in under-offers this month, which now total just under 3.0m sq ft, up 11% on the ten-year average. Similarly, the level of active requirements stands 46% above the ten-year average at 13.2m sq ft.

City Highlights

West End Highlights

The rise of Fintech in London

The Fintech sub-sector has matured and expanded to encompass numerous fields and its own sub-sectors, further blurring the lines between the Financial Services and Technology sectors, often making it difficult to differentiate between the two. Focussing on the occupiers whose core business model is built around financial technology itself, this year we have seen a high number of transactions from this sub-sector, with 15 completing in the first five months of the year, continuing the momentum from the high level of activity that took place in 2024.

In recent years, London has emerged as one of the world’s most prominent Fintech hubs thanks to its established financial services sector, favourable regulatory environment, and deep talent pool. This growth accelerated following the Covid-19 pandemic as firms had to adapt to a digital-first landscape, as many traditional banks struggled to quickly implement government-backed loan schemes and consumers shifted to online retail. Significant investment then followed, with the fintech sector in London attracting $3.6bn in venture capital investment between January and September 2020, making it the largest fintech hub in Europe and second only to San Francisco globally.

This growth has been reflected in office take-up in Central London. In 2024, take-up from the sub-sector totalled 385,786 sq ft, up 52% year-on-year, and was marginally above 2019 levels, in spite of the sector globally facing challenges as a result of inflation, economic uncertainty and a slowdown in venture capital funding. The increase was particularly pronounced in the City which saw more space acquired in 2024 than in the previous three years combined with several significant deals signing over the last 18 months including PayPal’s recent pre-let of 40,000 sq ft at 76 Upper Ground, SE1, in addition to Wise’s acquisition of 85,000 sq ft at the recently completed Worship Square, 65 Clifton Street, EC2 development.

The West End remains popular with smaller occupiers, including several paying top rents. For example, Fundment acquired the top two floors of Berners & Wells, W1, for a blended rent of £130.00 per sq ft, and Liquidity Capital acquiring the sixth floor at 127 Charing Cross Road, W1, for £117.50 per sq ft.

In terms of locations, the City core has seen the greatest activity, both by number of transactions (57%) and sq ft acquired (46%) in 2024. However, the proportion of take-up outside the City Core increased to 60% from 43% over the previous five years. In the West End, North of Oxford Street (East) and Soho have proved popular, having accounted for 62% of transactions in that market since 2023, and six of the seven that completed so far this year.

Despite macroeconomic headwinds posing difficulties for the sector, the future for the sector in London looks bright. The value of the capital’s fintech sector is set to reach £13.7bn by 2030, and recruiter Morgan McKinley is projecting hiring growth of 34% in 2025 alone as demand for talent in areas such as compliance, fraud, and cybersecurity endure.

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