DeVono Property’s Adam Landau on London’s next tech hotspots
Tech City and its surrounding areas is currently a victim of its own success. Many start-ups originally located on the fringe of the West End & City who were seeking more affordable rents and larger offices to accommodate growth have prospered.
Our research, which is based on having acquired the highest numbers of offices for companies moving into and around London over the past eight years, has indicated that interest for offices in Hackney has doubled over the past nine months, with the principle reason being that office rental levels have doubled in prime ‘Tech City locations’, over the last two years.
Surrounding Tech City areas including Clerkenwell, Farringdon & Old Street are no longer affordable for the very companies that landlords were looking to originally attract. Rents have increased at such an alarming rate that in some cases they are surpassing levels achieved in prime central London office locations such as Fitzrovia and Liverpool Street.
Start-ups and SMEs are now actively looking for the next hot spot and with this office migration, comes new office destinations that fit their financial and creative needs. Landlords’ aims are to achieve the highest possible rents and this has a direct effect on the next wave of entrepreneurs who we all hope become the next billion-pound business owners. Hackney due to its connectivity, pricing and availability offers them a solution.
Hackney has always been a fringe location that never really supported the central London office market until now. With the right types of buildings and the opportunity to refurbish these to fill the needs of fledgling companies, this will support the already booming local residential market where many London workers live.
While Hackney is certainly proving its competitive value, the next areas to watch are within the eastern fringes of the E1 heading into E2 postcodes as well as Silvertown, E16 which are all set for major infrastructure, retail, residential and commercial development. The fast-approaching construction of Crossrail will only add to their wider appeal, but the real attraction at the moment is the low office rents that these areas are commanding. South of the river, Southwark continues to host more SMEs than ever before. With rents significantly lower than Clerkenwell in most instances we’re expecting the continued growth of tech, communication and general startups and SMEs relocating to the SE1, London Bridge, Waterloo, Bermondsey areas.
London’s burgeoning ‘Silicon Valley’ will find new areas as these start-ups will always need affordable and reasonable rental costs to grow and thrive. This is only good news as we expand our pockets of industry, rather than confining them to expensive clusters.
Adam Landau is director of DeVono Property. www.devono.com