Rising rent costs for office space in London are forcing many tech firms in the capital to relocate outside of the city.
More than 2 in 5 tech companies voiced a lack of confidence in the city’s ability to provide sufficient space for growth over the next half decade – while a quarter have considered moving outside of London completely. Most new building developers want tenants to sign long term leases, however, many start up companies are hesitant to do so due to the uncertainty of their future growth and subsequent real estate needs.
Deloitte Real Estate, head of tenant representation, Chris Lewis, said, “If you take that 15-year lease away and replace it with 15 leases of two years or less, suddenly the ability for you to raise money against that and therefore satisfy banks is that much less.”
Many technology firms have already been pushed out of Silicon Roundabout and Tech City in Shoreditch due to rising rents. Common areas for many tech companies’ offices now include Aldgate, Whitechapel, Canary Wharf and the Docklands areas.
It is expected that a further 2m sq. ft of space will be needed by 2017 to accommodate for London’s growing media and technology firms, if rent costs remain affordable.
By: Kirsty MacGregor
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