Tech and media companies are taking up an increasing amount of office space in Central London, according to property consultancy Colliers International.
This year, firms in these high-growth industries were responsible for snapping up 24 percent more office space than both 2012 and 2011 respectively, the consultancy’s latest research has revealed.
Togehter they have have acquired 2.9 million square feet (sq ft) of office space in the year to date, driven partly by major deals such as Google’s decision to build a new UK headquarters on an 860,000 sq ft campus at King’s Cross and Facebook’s decision to move into an office down the road, where it is reported to be taking 85,000 square feet.
Guy Grantham, a director at Colliers International said he believes London's technology scene is largely focused around Farringdon, Clerkenwell and Shoreditch (FCS), with Tech City firmly established around Old Street.
“FCS has seen a net increase in media and tech occupation of 1.3 million sq ft since 2009, although much of the influx remains at the smaller end of the market,” he told Techworld.
Colliers International believes that 84 percent of businesses in the FCS area can be classed as tech or media firms.
The research shows that property occupation costs in FCS have risen 33 percent in the past 12 months and Grantham believes this is a direct result of the clustering effect that has come about with the influx of tech and media companies to the area.
Shoreditch Office Space, an organisation set up last year to help businesses find properties in Shoreditch, told Techworld that the abundance of warehouses and factories in the area has made it a perfect location for growing companies who are looking for a work space that "reflects their brand".
“A trend that we've become increasingly aware of is the migration of media and technology companies moving from West to East,” said Luke Francis, head of partnerships at Shoreditch Office Space.
Francis said that companies are eyeing up properties close to Silicon Roundabout because the area is better value for money than parts of West London. “An average of £35 per sq ft in Shoreditch compared to £65 in Soho means companies can afford to reduce their rental overheads without sacrificing on accessibility or a central location,” he said.
The only tech companies that are managing to break into the Square Mile, home to many of the UK's leading financial services companies, are those in fin-tech or those exclusively servicing the banking and financial sector, said Grantham.
“Going forward, in terms of location, tech and media companies are increasingly likely to be looking at similar locales and the prospect of exploring new geographies, such as Aldgate,” said Grantham. “Prime examples are News International, Ogilvy & Mather and UBM who have all relocated to the Southbank and London Bridge.”
Colliers International defined tech firms as cable companies, computer, software and electronics companies and internet related services. Meanwhile, those classed as media companies included advertising agencies, graphic designers, public relations, marketing, and publishing, among others.