Tech companies move east 17th March 2017

The pace of relocations in the Technology, Media and Telecommunications sector (TMT) shows no signs of slowing down, with the contemporary spaces and vibrant atmosphere of the City Fringe drawing businesses in droves, particularly to the newly revitalised Whitechapel and Aldgate.

Tech and Media companies are becoming increasingly uncoupled from traditional locations: in Whitechapel, Tech and Media occupation has more than doubled in the past two years and stands at a record level for the Aldgate submarket. Key relocations in the past 24 months include Uber, TAG Worldwide, Digital Window, Huddle, Sky Telemedia, Unruly, Integreon and Smart Focus.

Another key factor is the ‘war for talent’. In a poll conducted by OnePoll on behalf of ClickSoftware, location is the most important factor for British workers, coming in ahead of wages and job security. Across the country, around 20% of people stated that productivity at work could be adversely influenced by the location of their job; this figure increases to 26% in London. A “horrible location” is most likely to impact young professionals, and two-thirds of respondents have even considered leaving – or have left – their job for a change of scenery.

In the bluntest of terms, the cream of London’s creatives simply don’t want to live in West London and nor are they willing to work there. They want a work environment and lifestyle that matches their social one, and they are not prepared to compromise. We’ve even seen international companies with West London headquarters taking satellite space in Shoreditch to house their creative teams in order to secure – or keep – the workforce they want.

King’s Cross, Southbank and FACS (Farringdon, Aldgate, Clerkenwell and Shoreditch) have taken the lion’s share of start-ups, and wandering around the streets of these creative hubs is a markedly different experience to walking around the West End. The local colour, street scene and peer groups resonate far more with London’s young, urban creatives who are eschewing the establishment feel further west. Take note Fitzrovia, Soho, Covent Garden, et al.

With 1million square feet of space absorbed by tech & media companies in 2015 alone, accounting for 26% of all deals in the London office market, the TMT sector is now a key driver of London’s growth in an environment where office occupation has never been higher. Tech & media in the London office market has seen net growth in occupation of 5.2million square feet in the past five years and the sector currently employees over 325,000 people, with a further 46,000 new jobs forecast by 2024.

The nationwide picture is no less remarkable. In the last 5 years, the number of tech companies in the UK has grown by 45,000 (or 31%), effectively seeing one start-up created every hour of the day. Since the end of the financial crisis, the UK tech sector has delivered six years of continuous growth, created jobs at a faster and higher rate than any other, and is expected to boost the nation’s economy by £12bn over the next decade.