Technology and creative firms have sent rental prices rocketing across central London since the financial crisis, particularly in areas such as the north of Oxford Street and Euston where these firms have created hubs, according to new research out today by Knight Frank.
Noho – which stands for North of Soho and encompasses the area sandwiched between the Euston Road, Oxford Street and Tottenham Court Road – has seen an impressive 35 per cent jump in rents since the third quarter of 2007 as firms such as Facebook moved in.
“Taking into consideration the constrained development pipeline for Central London, the Crossrail stations with over-site development and their surrounding schemes, as well as the continued demand from occupiers to house their increased headcount, we expect the area’s positive performance to continue,” Knight Frank's head of west end leasing, Philip Hobley, said.
Rents in Shoreditch have risen by 26.3 per cent over the same period while in Aldgate and the South Bank they are up by 15.1 per cent and 19.8 per cent respectively.
In contrast, expensive but popular hubs like Mayfair only grew by seven per cent while the City core saw only 2.4 per cent growth.
The findings were published in Knight Frank’s latest annual Global Cities report, which found the same trend was true in other cities across the world that are now home to a rising number of digital and creative firms.
The report forecasts a surge in demand for city office space in the coming year as developers scramble to accommodate the extra 380m people United Nation data predicts will live in urban centres by 2020.
The number of people moving to cities over the next five years will be more than three times the current population of Japan, Knight Frank estimate.
Or put another way, five new cities, each the size of Los Angeles, will need to be built every year for the next five years to accommodate the expected 380m new city dwellers.