A growing number of technology companies are setting up operations within City of London office space, according to a new report on the subject. And as a result, Knight Frank, the real estate consultancy firm behind the study, insists that financial service businesses will increasingly find themselves competing with tech companies for offices in the so-called Square Mile.
Offices in the City of London have long been the home of banking and insurance groups from around the world, but the scale of space occupied by technology, media and telecoms (TMT) companies has increased sharply in recent quarters. Indeed, Knight Franks’ figures suggest that there was almost exactly twice as much office space acquired by TMT firms in the City during the first half of 2012 as compared with the previous year.
And with somewhere in the region of 730,000 sq ft of office space newly taken up by TMT companies in the Square Mile during the first half of 2012, the industry accounted for over a quarter of all office deals done in the district in the period. But as Knight Frank’s expert point out, it only accounted for around 10 percent of office space deals done in the City prior to the financial crisis that hit five years or so ago.
Interestingly, the influx of technology-based businesses in the traditionally finance-focused area has led to some notable changes in the way that the local offices are being used. According to Knight Frank, Wi-fi connectivity is becoming an absolute must and ‘thinking areas’ are starting to feature as office layouts are adjusted.
“We are gradually seeing the London economy reweight away from finance, and this is playing out in the City office market with the likes of activity from Mimecast, Skype and Weber Shandwick,” said Bradley Baker, head of Central London tenant representation at Knight Frank. “The kinds of businesses coming into the City now are the sort which would, traditionally, have taken up office space in the West End,” he added.
London has a number of high profile office space developments underway at present, including those along Fenchurch Street and along Broadgate in the City. Meanwhile, along the south bank of the Thames now stands the Shard development that is the tallest building in the European Union and home to several hundred thousand square feet of available London office space.