London’s biggest employment story during the last decade is Tech City, surrounding Old Street Roundabout. In recent years Tech City has undergone significant redevelopment, with investment from companies such as Cisco, Facebook, Google, Intel and McKinsey & Co. Now the third largest tech cluster in the world, it generates 27 per cent of London job growth and continues to attract significant investment into business innovation, telecoms, infrastructure and lifestyle amenities.
Many employed in the tech sector are entrepreneurs or freelancers, which has driven the growth of co-working and shared office space to accommodate the need for more flexible and affordable workspace. Furthermore, substantial numbers of these workers, many of whom are well remunerated, want to buy or rent apartments locally.
We can see demand for living close to work playing out in the Shoreditch property market, which has several co-working spaces in the pipeline, including Derwent London’s White Collar Factory at Old Street Roundabout, which will have over 40,000sqft of design-led shared workspace provided by The Office Group. Close by in the Tea Building, Soho Works has opened a 16,000sqft round-the-clock office for individuals and businesses in the creative industries.
As a developer, Rocket Investments has its own co-working space in The Atlas Building, a mixed-use development in Shoreditch with a 40-storey residential building at its heart. By letting 80,000sqft of space in Provost & East – the name of the commercial building across the new piazza – to WeWork, a brand known for creating digital and tech-savvy workspaces, residents will have co-working space on their doorstep.
This commercial trend will draw more tech and entrepreneurial talent to the area, boosting demand for residential property. One of the factors driving population growth in East London and the City is affordability. City Road is a five-minute walk to the City, where average house prices are 38 per cent higher than in Old Street. Demand and, therefore, price growth has shifted east.
According to JLL Research, prices in the City fringe area are expected to remain robust in 2016 and, with 21.9 per cent annual price growth predicted between now and 2020, it’s set to outpace much of Central London. Rental demand is also strong. Since 2012, rental price growth on the outskirts of the City grew by 13.8 per cent and, between 2016 and 2020, it is predicted to rise by 25.8 per cent.
If the success story of Shoreditch and the wider City Fringe market is to act as a guide, investors need to look for developing employment hotspots. Of course, it is also important to consider other indicators for places on the up, such as bars, restaurants and cafes, as well as infrastructure improvements, but another strong indicator is new co-working projects coming to fruition.
Where collaborative workspaces and co-working communities are moving in, new residents are sure to follow.