Mayfair’s well-heeled financiers will doubtless have reaped the rewards of a bumper 2021, with more private equity deals done last year than ever before. But now the sector has found a new way of rewarding its people: new offices.

Research from BNP Paribas Real Estate shows that banking and finance occupiers have driven a surge in office leasing in the West End’s most exclusive postcodes, with more than a quarter of take-up going to that sector alone.

Finance occupiers were responsible for 178,400 sq ft of completed office deals in the opening months of the year across the entire West End, with the next biggest industry grouping for take-up – media and tech – coming in at 91,300 sq ft.

It is the highest first quarter take-up for the West End’s most exclusive sector since 2014, and the second-highest first quarter in a decade.

And the increased demand has pushed rents up across Mayfair and St James’s on a quarter-by-quarter basis, from an average of £117.50 per sq ft in Q4 last year to £120 per sq ft in Q1 2020.

Simon Knights, BNP PRE’s head of West End agency, expects some rents to soar as high as £200 per sq ft in the coming months, as demand continues to ramp up.

“We have the perfect storm of massive demand from occupiers who have traded well in the past two years and they need to attract the next talent to fling at the gates,” he said. “Their hunger [is] fed by the ever-elaborate disengagement of office from home.

“These titans have been working from homes in Mayfair, Holland Park, Knightsbridge, Belgravia and Chelsea for the last decade. This is not new to them.”

US giants drive the market

Deals such as Warburg Pincus, a US private equity giant, taking 24,000 sq ft at Tristan Capital’s Stirling Square, SW1, for a rent of more than £150 per sq ft for its new headquarters have been key drivers of the upturn.

Meanwhile, Blackstone has agreed to take 40,000 sq ft at Berkeley Square House, W1, just opposite its existing headquarters on the square, after a significant recruitment drive in the past few years.

Blackstone has hired about 200 people in London since the start of the pandemic in 2020, Bloomberg reported, increasing its headcount to 500 people. The firm, which has been luring talent from investment banks, paid a record $1.6bn (£1.2bn) in performance-related pay to its dealmakers and executives in 2021.

Knights added: “It is often said that the financial occupiers of Mayfair and St James’s have more money than sense. I would agree – but they do have an awful lot of sense.

“Mayfair or St James’s? It depends if you like a red Ferrari or a blue Ferrari. Same car, different style. Go figure.”