East London’s Silicon Roundabout is facing a huge increase in rent as more established tech firms move in. Joshua Brown describes how many of the UK’s tech hubs are venturing away from London and the growth they have already achieved.
Silicon Roundabout, aka Tech City, is the term coined for an area in Old Street next to the London Borough of Hackney, which houses several of the latest and fastest growing technology firms.
Back in 2008, the area only had 15 or so tech firms situated there, beginning with the likes of Dopplr and Last.fm.
It has now ballooned to having just under 1500 firms, according to Tech City Map, which analyses and records the market of east London technology firms.
There’s now a wealth of firms starting out there, from new starters such as Payango and Shopzilla, to the more established firms like Cisco and EE.
Why is Silicon Roundabout’s future in turmoil?
There are two competing factors that have left the future of Tech City subdued.
Firstly, the sheer number of firms coming to the Shoreditch area is increasing. With an estimated increase of over 10,000% over 6 years, office space has become incredibly limited, which pushes up the rent price not only for new tenants, but also existing tenants.
Secondly, the size of firm coming to Shoreditch is changing, with some of the biggest names in the tech world locating a major spot there, including: Cisco, Facebook, Google, Microsoft and Twitter. This has meant an increase in rent, as landlords set to cash in on the lucrative business opportunity, and this trend is only set to continue.
Where’s the talent?
One of the biggest challenges to the continued growth of Tech City is finding the right talent. A recent report from Tech London Advocates suggests that there is a massive skills shortage that is hampering tech firms to fill their vacancies. This has led finding the right talent within the Shoreditch area very difficult, and will only be harder to find as the demand for such talent continues.
Silicon Gorge and Croydon Tech City
With soaring rents in Shoreditch reaching highs of £40 per square ft, it’s not surprising that start-ups notoriously plagued with limited funds are finding other alternatives, with many suggesting new London technology attractions including: Silicon Fields, the Kentish Cluster and Croydon Tech City.
The Office of National Statistics has reported that Croydon has achieved 23% growth of new tech firms between 2011 and 2013, which was higher than east London (17.1%) and the rest of the UK across the same period.
However, these new technological hubs such as Silicon Fields, the Kentish Cluster and Croydon Tech City, rent still continues to be high at £20 – £30 per square ft in these newly established areas.
Many firms are now moving further west to places such as Bristol’s Silicon Gorge, Bath and Birmingham, as rent is considerably lower in these areas. With more established talent and local councils investing in the area, new tech hubs are being created.
How Grovelands can help
Grovelands TMT practice has already helped a number of large technology firms with their relocation projects into a number of areas, including the Bristol/Bath area (Silicon Gorge) and also abroad into Europe’s hubs in Barcelona and Munich.