Office take-up by tech and media firms in Whitechapel, Canary Wharf and the Docklands is on track to overtake London’s traditional industry mecca of Shoreditch this year as companies go in search of cheaper rents, according to new data seen by City A.M.
Property advisory firm Colliers International said 79,740 square feet of space was snapped up by tech firms in Aldgate and Whitechapel in the first three months of the year compared to just 8,197 sq ft in Shoreditch.
This follows the trend seen in 2014, with 33 per cent of firms heading to Aldgate and Whitechapel, 46 per cent to Canary Wharf and the Docklands – only 21 per cent chose Shoreditch.
Rents in London’s east end have soared over the last decade due to the area’s popularity, not only with small to medium sized firms but also with corporates looking to get closer to London’s creative talent pool.
The average rent in Clerkenwell and Farringdon now averages £62.50 per sq ft while in Shoreditch landlords charge around £55 per sq ft. That compares with £47.50 in Aldgate and Whitechapel, £27.50 in the Docklands and £40 per sq ft in Canary Wharf.
However, Colliers’ international research and forecast director Guy Grantham said it was not only rent that was forcing many firms to go elsewhere, but also lack of available space.
“With vacancy rates so low in some of these locations, there is a choice of two or three buildings and that’s it and landlords know it. So there are some very tight and tough deals that are being negotiated at the moment,” Grantham told City A.M.
“The fact that vacancy rates are so low – down at one to two per cent – it’s almost forcing people to look further east,” he said.
Grantham said small tech firms were struggling to compete for space in major schemes, “because owners and developers are less keen to let part of a floor on these huge schemes to occupiers with not-so-great covenants.” And he predicts more to drift towards Canary Wharf – where Alibaba and Truphone recently relocated offices to.