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Hedge Funds Get Squeezed in Mayfair as Offices Become Homes

Landlords in Mayfair and St. James’s, two of London’s most expensive neighborhoods, are exploiting a shrinking supply of new or refurbished office space to charge hedge funds and financial firms the highest rents in three years.

Offices are being converted into residences costing 2,000 pounds ($3,100) a square foot or more as demand surges from foreign buyers seeking luxury homes in central London. A shortage of financing for new development and restrictions on high-rise projects add to the squeeze on commercial space.