Shoreditch will achieve the strongest office rental growth in central London, between now and December 2020, according to the latest predictions from Knight Frank Economics & Forecasting team.
This reflects the growing importance of technology and creative industries to the capital’s economy. Southbank and Fitzrovia ranked second and third respectively are also popular locations with firms active in the digital economy.
In 2017, office take-up by technology, media and telecoms (TMT) firms increased by nearly 8%, to 3.3 million sq ft, overshadowing the financial sector which acquired 1.5 million sq ft. Given the wave of new technologies in development, from driverless vehicles to artificial intelligence, Knight Frank believe there is further growth to come from tech. This will have a knock-on impact for offices in districts that are popular with the TMT sector, such as Shoreditch and Southbank.
These changes are coinciding with an expected squeeze on available office supply in 2018, with just 3 million sq ft of vacant new office space completing development this year, in a market which saw 13.8 million sq ft of office space let to occupiers in 2017.
James Roberts, Chief Economist, Knight Frank, commented: “Tech firms essentially live in a borderless world, so the uncertainty of Brexit has less impact on them. This is why we see office districts popular with this key sector enjoying strong momentum over the next three years.
“Inevitably, 2018 will be a relative flat year for districts less popular with tech firms, due to the political uncertainty. However, over the next few years tech’s success will filter through to the broader London economy, as sectors such as finance, law and accounting find themselves working more for clients in the digital space. This will export rental growth to other districts in central London.”
