TMT City office 22nd May 2013

Absorption of space in the City by the Media and Tech sector has continued in Q1 2013, with occupation increasing by over 150,000 sq ft across the whole of the City market, according to the latest research from Colliers International.

Tech companies remain the largest single business sector in terms of demand across Central London. Colliers’ Q1 2013 Media and Technology Monitor revealed that Demand from the Tech and Media sector continues to be strong for office space in London generally.

Tech and Media occupiers accounted for 1.2m sq ft of take-up across Central London in Q1 2013. This represented 40% of total transactions recorded in the first three months of the year. Within the West End market that proportion rose to 63% aided by the letting to Google at King’s Cross.

While the West End is seen as the traditional focus of the tech and media sector, the past few years have seen a shift, not only to the new locations in the northern and eastern parts of the City of London but also within the West End villages themselves. Media and Tech occupiers accounted for 31% of take-up in 2012.

Guy Grantham, director of research and forecasting at Colliers International, said: “Whilst the banking sector is on the back foot, media and tech continues to be a major contributor to positive absorption in the City market. Media and Tech occupation has increased by over 28% in the City market since 2009, up from 5.6m sq ft to its current level of 7.2m sq ft. “However, the 75% of activity remains at the sub 5,000 sq ft level, so the question remains as to whether the Media and Tech sector can fill the void in terms of volume of take-up, left by the banking sector, particularly in the core areas of the City.

Of the 165 companies increasing their presence, the average increase in size was 6,148 sq ft.” Independent forecasts suggest that Britain’s GDP assigned to tech and media is only set to grow over the next five years. Estimates show that the tech sector could generate over 12% of British GDP by 2016. Colliers International 2013 MTM shows that between 2009 and 2012, there were 549 new Media and Tech entrants into the wider City market, totalling 3.3m sq ft. This is a net increase of 1.6m sq ft since 2009 while banking sector occupation has shrunk by 5% (629,000 sq ft).

“Understanding the requirements of both blue chip tech occupiers and start-ups is becoming an essential part of landlords and developers métier,” explains Grantham. “Addressing current space requirements, as well as looking at the influence of rental ceilings and thresholds for tech occupiers are becoming vital in targeting appropriate tenants. Developers will be challenged to create an offer that will be commercially viable, flexible and cohere with the needs and aspirations of the occupiers.”