Rentals in prime London remain fuelled by corporate employees, but demand is shifting from tenants in the finance industry to those in the technology industry, according to a leading London property consultancy.
Over the next five years it is estimated that there will be an additional 368,000 employees in London, reported Savills in July. Around 25 per cent of these will be accounted for by the technology industry, which is set to become the largest industry in central London, with growth in the sector across the UK expected to outstrip that of California’s ‘Silicon Valley.’
Compared to employees in the financial and insurance industry, who from 2007 to 2013 increased by six per cent (underperforming the London average of 10 per cent growth), tech industry employees grew by 19 per cent over the same period. The latter, however, have on average 25 per cent less budget when relocating. This disparity naturally impacts on where they choose to live in London, resulting in a locational shift.
The tech industry has traditionally been concentrated around Old Street and has dispersed outwards from there. Consequently, areas such as Highbury and Islington have benefited from a rental perspective, with 22 per cent of employees living in these areas working in the sector. This is due to their easy accessibility from the core technological hubs and excellent transport links.
Areas surrounding and easily commutable to King’s Cross, the location of Google’s new headquarters, are likely to enjoy similar success and Savills predicts a nine per cent increase in office based employment here by 2018. Financial services employees on the other hand prefer living in prime central London locations such as Chelsea or near to their work, in Wapping.