The amount of office space taken-up by hedge funds in London's West End doubled from 25,000 sq ft to 58,000 sq ft in the last 12 months, according to new research by Cushman & Wakefield (C&W).
Within the alternative investment market, hedge funds have been the most active in leasing office space, currently representing 31 per cent of all uptake in 2013 so far.
The report further revealed that even though hedge funds are still favouring St James' and Mayfair, with vacancy rates in such areas standing at a mere 3.98 per cent, Grade A office space in western Soho and Marylebone is still considered.
Henry Peto, partner at C&W, said: “There is increasing competition within the alternative investment sector with hedge funds, private equity and wealth management companies all looking to secure first class office space. Vacancy rates continue to fall in Mayfair and St James’s with rumoured rents of £135 per sq ft being paid by Temasek at 23 King Street, which is close to the peak of the last cycle in 2007.’’
Industry analysts suggest that this boost in market activity has been caused by established funds such as BlueBay, Highbridge and Elliot Advisors all growing in size. This is in contrast to start-up firms which still remain stuck in the market due to tight regulations and them finding it hard to raise seed capital.
It is important to note however that most hedge fund activity still remains below 5,000 sq ft, with an increasing number of landlords choosing to split floors within properties. Devonshire House and 23 Savile Row are examples of this.