The reason behind the emergence of a number of tech hubs in the UK’s smaller towns and cities could have been unearthed in a recent market report. According to a Knight Frank property report, London is home to ‘the world’s most expensive technology hub’.
It has emerged that London’s Silicon Roundabout is in fact the most expensive tech hub across the globe, with rent reaching the dizzying heights of £70 per square foot. That is some £11 per square foot more than it is to rent in San Francisco’s Mid-Market areas and Dublin’s Docklands area which is home to Google, Facebook and Twitter.
Meanwhile renting an office by the Shoreditch roundabout is almost twice as expensive as it is in New York’s Brooklyn tech hub. In fact, locating a business in east London is now almost as expensive as renting office space in the Square Mile, the capital’s main financial district.
At the other end of the scale, Berlin’s Potzdamer Platz office rents are just £31 per square foot, while the city centre in Amsterdam, which is home to the city’s burgeoning tech sector, offers office space at £26.50 per square foot.
But perhaps the sky-high rent prices are not such a bad thing. James Nicholson, partner at Knight Frank, said that the high rents represent the demand to be positioned in London’s tech centre. “Whilst Shoreditch is just one submarket favoured by tech and creative firms, this submarket is the poster child for the growth of London’s tech driven evolution – the high rents reflect how greatly tech and creative firms value having an office in the capital,” he said.
However, the high prices in London’s tech centre could also have something to do with the flourishing tech hubs in the UK outside of the capital. While London was still ranked as the UK’s main tech centre, a recent survey found that niche areas of tech were leading to emerging tech hubs across the country.
In particular, the fifth UK Tech Innovation Index, found that smaller cities across the UK are fuelling technology innovation in areas such as manufacturing, virtual reality and IoT production. The Index found that while London, Edinburgh, Manchester and Brighton were the biggest innovators, the likes of Liverpool and Reading were leaders in IoT development. Meanwhile Coventry and Aberdeen topped the leaderboard for manufacturing and Cardiff was identified as producing ‘an emerging virtual reality innovation cluster.
In fact, over the past 12 months Wales has emerged as a key city for tech innovation. Stephen Thair, chief product officer at DevOpsGuys believes that there is a direct correlation between the cheaper cost and the success Wales is seeing. He said: “There are a lot of people who are working in London who want a better work/life balance, particularly as they establish families. They are often faced with being stuck in London or moving out of the tech industry completely if they move out. The more devolved the tech industry is the more opportunities there are to work in places with a better work/life balance and that’s great for the UK as a whole.”
So are London’s high rent prices a draw or a deterrent? Well I suppose that depends on how much money you’ve got.