New data from Knight Frank reveals that hedge funds are currently hunting for 474,000 sq ft of office space in London – the highest active requirement figure since the firm began collecting data in 2019.

London’s niche financial sector, which includes hedge funds, private equity firms, family offices, asset and wealth managers, merchant banks, etc, have taken 1.5m sq ft of new office space since the start of 2024.

Last year’s take up was 16% higher than the five-year annual average for this sector, which currently has 1.7m sq ft of active office requirements for searches of 10,000 sq ft or more.

The West End has been the most popular destination, accounting for 78% of all leasing transactions since 2024, with Mayfair and St James’s seeing the highest volume of deals for hedge funds.

Hedge funds were followed closely by private equity firms, who have leased 315,000 sq ft of new office space since the start of 2024 – 20% of total niche financial sector take-up.

Julian Woolgar, partner, head of West End tenant representation at Knight Frank, said: “Comments from financial institutions with office-first mandates such as Blackrock, who have lamented the lack of available new office developments, reflects how companies have to secure space well ahead of their current leases expiring.

“In many instances those that have an historic preference for Mayfair and St James’s are also having to consider neighbouring areas such as Marylebone, Fitzrovia or Soho to secure the best office space. Most current requirements are expansion led and almost exclusively seeking an upgrade on existing workspaces, which is creating a competitive market given that vacancy rates are near record lows in both the West End and the City.”

James Fairweather, partner and head of Central London tenant representation at Knight Frank, added: “Many hedge funds and private equity firms wanted to exclusively be in the West End Core to co-locate with clients. We are also seeing a strong preference from US firms for space in the West End core.

“There is now a greater emphasis on occupying the best available space to support talent retention, collaboration and long-term growth plans. Pre-let lead times are rising, with offices currently under construction being fully let over a year before completion and this increases to 28 months for spaces exceeding 100,000 sq ft.”