When you think about up and coming tech businesses in the capital, Shoreditch and the so-called Silicon Roundabout (Old Street) comes to mind. From as early as 2007, this now achingly-hip corner of London has attracted some of the brightest minds in Britain and been home to their businesses.
But with rents reaching all time highs, the smart money is moving further afield.
The end of the cluster as we know it
Prices have skyrocketed and the figures speak for themselves. Just 4 years ago rents around the Old Street roundabout were £40 per sq ft. Now at £65 per sq foot, Shoreditch rents are £1.50 less than the neighbouring City of London and show no sign of slowing down.
In the past, digital businesses flocked East in search of cheap rents and a booming creative community, but now the trend has changed dramatically.
“Fast-growing businesses are increasingly less focussed on location and more interested in the quality of building available” says Patrick Scanlon, Partner at Knight Frank.
Facebook is one example of this growing trend. The social network recently chose Rathbone Square, a grade A development in prime central Fitzrovia for its new UK headquarters. Facebook will pay a reported £85 per sq ft for this premium space surrounded by London’s biggest ad agencies.
In the past innovative companies clustered around each other, creating areas like what is now known as London’s Tech City. But with a lack of large grade A spaces available, data from Knight Frank, shows companies are now happier to leave their cluster behind and switch in favour of getting the best possible space.
Looking East and West
Earlier stage businesses are also looking further afield.
Whitechapel and Canary Wharf are fast-becoming popular choices for better value and quality spaces and connections to London’s financial districts.
Up until now, West London has been often overlooked as a place for smaller businesses, but with millions of pounds of investment pouring in, that could all change. The Collective, based in Bedford Square in central London, offers flexible workspaces for fast-growing businesses and is also home to The Memo’s headquarters.
With demand for flexible spaces reaching all time highs, the group behind The Collective is taking a bet on a new space in West London as the next space to attract creative businesses. “There’s a distinct lack of supply in West London, meaning the market is ripe for disruption” says James Scott, COO at The Collective.
“Acton is at the same stage that Shoreditch was at 10 years ago – it’s affordable, and with the arrival of Crossrail will be very well connected. The launch of Imperial’s White City Campus too will create even more innovation and entrepreneurialism, which will only serve to fuel the demand for co-working space.”
There is no doubting Shoreditch is the focal point for tech across the capital and arguably Europe. But as tech becomes increasingly important to every industry, and demand for space continues to grow, it has naturally spread across the city.
With the 5th anniversary of London’s Tech City weeks away, now is the time to look beyond East London.
The post Why smart businesses are swapping sky-high Shoreditch rents for the West End appeared first on The Memo.