The doubling of office rents in Shoreditch, Clerkenwell, Aldgate and Whitechapel over the past five years is forcing digital media and tech start-up companies that set up in the east end of London to consider relocating to emerging markets, such as Stratford.
As supply tightens and more established firms willing to pay higher rents flock to the East End, it is inevitable that some businesses will have to look further afield to cheaper locations such as Hackney Wick and Stratford, a recent report by advisory firm JLL confirms.
In London’s tech hub centred around Silicon Roundabout in Old Street, office space can command up to £55 per square foot in rent. This is a sharp increase from five years ago when communications agency Splendid agreed a deal of £17-18 per square foot when it leased office space in nearby Tabernacle Street.
And real estate investment trust Derwent London has recently secured rents of up to £52.50 per square foot at its Buckley Building development on Clerkenwell Green, where Unilever and Deloitte Digital will be among the bluechip companies occupying the space.
Jon Neale, head of UK research at commercial property specialist JLL, says: “Rents have increased substantially around Old Street but that always happens when there is a buoyant market and not a huge supply.”
This is why JLL chief executive Guy Grainger predicts new emerging areas like Stratford and Silvertown will become the next office districts during 2015.
“There is some really interesting place-making coming through outside of the core, which is really exciting. With Crossrail, you will see core London and the office district spreading out,” he says.
Image credit: Thomas Nugent