Hedge funds scramble for scarce Mayfair office space
Hedge funds, private equity firms and specialist managers are moving earlier and widening searches as 1.8m sq ft of demand competes for limited new-build offices in Mayfair and St James’s.
Knight Frank is tracking 1.8 million square feet of active requirements across 33 searches from niche financial occupiers seeking offices in Mayfair, St James’s and the wider West End.
The demand includes about 252,000 square feet from hedge funds and roughly 235,000 square feet from private equity firms. Only around 342,000 square feet, or 19% of the total requirement, is currently under offer or in negotiations, leaving about 1.5 million square feet still looking for suitable premises.
New-build vacancy in Mayfair and St James’s has fallen to 0.4%, compared with 1.5% across the wider West End. At the end of the second quarter there was no immediately available new or comprehensively refurbished building large enough to meet an 80,000-square-foot requirement. Across London, half of the submarkets tracked report new-build vacancy rates of 1% or less.
Leasing activity in the first half of 2026 was lower than in recent years. Niche financial firms completed 32 transactions covering 343,265 square feet, a 59% decline in total space leased and a 41% drop in the number of deals compared with the first half of 2025. Knight Frank attributes much of the reduction to the absence of very large transactions; two lettings above 100,000 square feet were completed in each of 2024 and 2025, while none of that scale has been recorded so far in 2026.
Leases completed in the first half show continued demand for high-quality space. Verition Advisors took 49,287 square feet at Lucent on Sherwood Street, Sona Asset Management leased 41,055 square feet at Pegasus, GHO Capital agreed 28,408 square feet at 33 Jermyn Street and Pharo Management committed to 21,358 square feet at 105 Victoria Street. All hedge fund transactions recorded in the period involved either new-build or comprehensively refurbished offices; 90.4% of private equity deals were the same.
Future supply is being absorbed before completion. About one million square feet of office space in the West End Core is scheduled to complete in 2027, and roughly 40% of that has already been pre-let. Major commitments include Ares Management’s 123,968-square-foot headquarters at 1 Hanover Street and Blackstone’s 231,737-square-foot deal at Lansdowne House in Berkeley Square. Additional space is subject to advanced negotiations.
Beyond 2027 the pipeline thins. Only 184,054 square feet is scheduled for completion in the West End Core between 2028 and 2030, with 111,379 square feet already committed and roughly 73,000 square feet remaining unallocated against a financial sector requirement of about 1.5 million square feet. The long-term average annual take-up of new and refurbished offices in the West End Core is around 348,000 square feet.
Knight Frank forecasts that prime rents for the best West End offices could rise by almost 20% to more than £230 per square foot by 2030. The adviser notes that expanding operations, constrained development and rising rents are prompting some firms to prioritise longer-term office planning.
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