New market data from online rental brand Residently has found that the capital’s tech hubs are leading London rental growth.
The firm has seen strong growth across the capital’s tech centres, namely Shoreditch and burgeoning hotspots King’s Cross, Hammersmith and White City, Soho, and Battersea.
Soho, in particular, has recorded substantial growth over the past year, with rent prices on one and two-bedroom apartments increasing by an average of 26%, compared to tech stalwart Shoreditch, which experienced growth of 1.7% over the same period.
The capital’s tech growth has hit an all-time high, with global firms investing heavily in London offices, despite the shadow of Brexit. In fact, the capital now employs more people in the technology, media and telecoms sectors than it does in finance.
The rise in collaborative and creative co-working spaces has also contributed to the success of these hubs, acting as a ripple effect on the wider local environment, as new cafes, bars and shops spring up to support workers. In particular, this tech ripple has transformed a number of down-market locations across London into places where people really want to live, as well as work.
Tech giants do all they can to attract the best talent, which means not only creating inspiring and impressive workspaces, but also reinforcing their locations as the best places to be. This, in turn, is having a knock-on effect on office rent prices.
This is particularly prevalent in London’s original Tech City, which emerged in the late 00s, when a cluster of web-based businesses settled in the area. Following the recession and a period of reduced rents, the area around the Old Street roundabout became affordable to start-ups, whilst redundancies in the financial sector released significant entrepreneurial talent into the market.
Since then, office rents have risen considerably and, last year, prices in Shoreditch overtook those in the City for the first time in history. The impact of this on the residential market has been substantial, with property values rising sharply over the past decade.
Rent prices for one and two-bed apartments in the area have grown by an average of 1.7% in the past year, with a typical two-bed place demanding a huge £2,440 per month.
However, Tech City’s rising office rents have caused many firms to move elsewhere. In fact, a number of Silicon Valley companies, including Google, Facebook and Apple, have selected other parts of the capital for their UK headquarters.
King’s Cross has become a popular spot for both tech giants and flourishing start-ups, with Google’s £1 billion headquarters and Facebook’s plans to open an office in King’s Cross Central, which, at over 700,000 square feet, will triple the firm’s footprint in London.
The impact of this news, combined with significant local redevelopment, has transformed King’s Cross into one of the capital’s hottest destinations. Residently has found that rent prices have increased by an average of 13% over the past year, with substantial demand coming from nearby workers.
Trevor Stunden, the CCO at Residently, says: “We are experiencing strong demand for rental properties in areas such as King’s Cross and Shoreditch. People no longer want to slog across London to reach their office, meaning the quality of housing in areas surrounding tech headquarters has continued to improve, as workers relocate to be near work.
“The way we live has completely changed – gone are the days of a job for life or a home forever. People no longer necessarily want to purchase a property in the capital, especially if they work for a start-up or international tech firm that could take them abroad at any time. People want the flexibility to move around and at pace. Business is constantly on the move and we appreciate that finding a property can take a huge amount of time and energy.”
Of all the major tech hubs, Soho has experienced the sharpest rise in rent prices, with a strong 26% increase over the past year. The presence of Snapchat and Twitter in the area, combined with the long-established creative industries, has continued to drive growth, while the upcoming launch of Crossrail has opened this location up to commuters who wish to rent near their offices during the week.
Further west, Hammersmith and White City is working hard to become a full tech hub in its own right. Imperial College London has joined forces with Hammersmith & Fulham Council to create a global beacon for biotech, digital and creative industries.
In recent years, Hammersmith has attracted household names, including Disney, General Electric, L’Oreal and Fox TV, which, in turn, has driven consistent demand for rental properties. One and two-bed apartments have recorded healthy growth of 3% over the last year, as young professionals and couples take advantage of the excellent employment opportunities, and transport links in and out of London.
South of the river, the news of Apple’s new 500,000 square foot London campus at Battersea Power Station has cast a spotlight on the area. The relocation of the new American Embassy at nearby Nine Elms, and ambitious plans for retail and leisure, is also set to pull in millions of visitors every year.
An extension of the Northern Line will also link Battersea to the rest of the capital and open the area up to workers from all across London. The additional benefit of excellent local schools has boosted rent prices by 8% over the past year, as workers and families try to beat the boom.
With demand for rental properties in the capital’s tech hubs only set to surge further, landlords should look to capitalise on London rental growth by investing in these locations before it’s too expensive.
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