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Tech firms drive up London office rents

Established technology firms in Shoreditch are driving up rents in East London as they close the gap on City Core rents, new figures have shown.

According to research released today by property consultants Frank Knight, rents in the capital’s thriving tech hotbed grew by nearly 24% in 2015 as established technology firms made East London their home.

That figure is double the 12% increase seen in London’s traditional financial core.

With rents in Shoreditch reaching an average of £65 per sq ft last year, 2016 is expected to be another year of high growth with rents expected to increase by a further 10%.

Dan Gaunt, Head of City Leasing at Frank Knight, believes the figures attest to the quality of London’s workspaces and commented: “The gap between rents in traditional core areas and other sub-markets has never been so small.

“Occupiers are making decisions based on quality of product and amenity, availability of scale, adjacency of workforce and not by postcode.”

James Roberts, Frank Knight’s Chief Economist, added: “What has surprised everyone is that Shoreditch office rents have got so close to those of the City Core. Everyone assumed the tech firms could not afford rents that high.

“However, the more successful startups from five or six years ago have matured into larger, established companies with deeper pockets. They now need bigger, modern, high quality offices, and they can afford to pay to get what they want.

“It’s what happened in Silicon Valley; but there the process took decades, in Shoreditch it has happened in a few years.”