Wednesday, 29 March 2017
Last updated 20 min ago
Sep 12 2013 | 11:57am ET
Hedge funds snapped up more than twice as much office space in London's West End last year as in 2011, as the industry seeks space for more stock traders, salesmen and marketing professionals, and U.S. hedge funds boost their presence in the British capital.
Hedge funds leased 58,000 square feet of new space in the area in 2012, according to Cushman & Wakefield. In 2011, industry players added only 25,000 square feet to their footprint.
The biggest new leasers are BlueBay Asset Management, Elliott Management and Highbridge Capital Management, the real-estate brokerage said.
"There are not a lot of startups that are taking space today and that is a big change from six or seven years ago," Cushman's Henry Peto said. "We are seeing a consolidation of the industry with investors attracted to the more mature and larger hedge funds, who've been driving the space take-up in the West End."
According to Financial News, there are several driving forces behind the push in the West End. The renewed success—and concomitant popularity—of equity strategies has hedge funds hiring more managers in the space, notably BlueCrest Capital Management and CQS. Hiring is also up in distribution, as firms seek to rebuild assets lost during the financial crisis and accommodate more demanding institutional clients. In addition, a number of prominent U.S. fund managers, including Angelo Gordon & Co., Beach Point Capital, Elliott, Highbridge and Viking Global Investors, have been moving into the West End.
Hedge funds continued to favor Mayfair and St. James's, where they account for 31% of office space leased. Private-equity firms, whose new West End leasing held steady in 2012 at 45,000 square feet, account for 24% of office space leased in the neighborhoods, where the vacancy rate is below 4%.
Hedge funds priced- or spaced-out of Mayfair and St. James—where some rents are nearing their 2007 peaks—are looking slightly farther afield, to Marylebone and Soho, Cushman said.