When concerns are raised over the potential loss of financial jobs as a result of Brexit, the rising prevalence of tech and creative firms is often cited as the best fit for filling any surplus space in the market.
All the signs are good. The tech revolution is well underway in London and office demand has been driven by the sector for quite some time.
Since the EU referendum, Google has put forward a £1bn investment plan for new headquarters in King’s Cross, Facebook announced an additional 500 jobs for London and Apple revealed plans for new 500,000 sq ft headquarters in Battersea.
But to remain a global tech hub, London’s offices need to be filled by tech companies of all sizes and the truth is, property owners and developers are still in the process of adapting their offer to accommodate what we look for in our workspace.
This has given rise to a new breed of workspace providers, who are changing the commercial real estate landscape in order to better respond to the tech sector’s needs.
A key difference between tech firms and the companies which traditionally formed a property owner’s leasing pipeline is their potential for fast-paced growth. It is quite possible for a tech startup’s requirements to grow from 5,000 sq ft to 50,000 sq ft within the space of a few years. When my PropTech startup made the move from co-working space to our own office in London, the most important factor was a flexible lease; over price per square foot or even location.
This can undoubtedly make landlords nervous, but for countless tech startups who’ve secured a generous round of fundraising, our need for flexible leases isn’t because we foresee “going under” anytime too soon – it’s because we plan to scale up fast and need space that can grow with our team. Everything moves faster in a startup, and I chose Workspace as our landlord specifically because of their flexibility on this point: on top of their 6-month break clause, they give the option to move to a bigger office within their portfolio as soon as one becomes available.
The popularity of such flexible workspace means traditional landlords are having to adapt, with British Land; for example, recently launching Storey: a flexible workspace brand targeted at companies with 20 to 70 employees who’ve outgrown co-working solutions.
Such flexibility isn’t just appealing to small tech startups, with an increasing portion of Workspace’s leases being snapped up by established businesses. Another flexible workspace leader in the London market is The Office Group, who count tech giants such as AOL and Dropbox as tenants.
The fact that a majority stake in TOG was recently bought by Blackstone for £500m demonstrates the increasing value of providing flexible work environments, with the disruptive rise of co-working further testament to this shift.
However, flexibility isn’t the only factor that has enabled co-working giants such as WeWork to change the commercial property landscape.
Having a WeWork office in NYC provided my small team not only with the flexibility to grow and leave on short notice but also to experience the amenities and culture that tech companies are renowned for. Free beer on tap, smart building technology, design-led offices and happy hour networking with the other tenants: these are the sort of perks that help attract talent to a startup’s high-risk job offering.
For Built-ID, we were still too small to sustain such perks ourselves, so the fact that our landlord offered them to my team counted for a lot.
WeWork’s tagline, “get the space, community, and services you need to make a life, not just a living,” doesn’t just sum up the changing expectations companies have of their workspace, it reflects the changing expectation tech employees have of their experience at work more broadly. I believe the reason WeWork is valued higher than a more traditional flexible workspace provider; like Regus, is in large part due to their careful curation of the atmosphere that employees expect in the tech sector.
Now, property firms are re-thinking how, what and where to build. In the face of stiff competition, the pressure is on to get this right. However, competition is fuelling creativity and combined with the tech world’s love of the original we are seeing some really interesting changes to office space in London.
From a developers’ perspective, we are seeing that the majority of major schemes now incorporate some form of tech focused offering. Often this includes co-working space, smart building solutions and flexible or shorter-term leasing options via providers like TOG.
In short, the rise of London tech is making the property sector work much harder and take more risks. Tech is re-writing the rules of commercial real estate in London and the pace of change is as rapid as the growth of the sector itself.
Savannah de Savary is the founder of Built-ID, an online platform enabling the property community to showcase their projects, industry collaborations and client endorsements via profile pages. The company has recently received investment from property magnate Nick Leslau, in addition to being supported by PropTech venture capitalists PiLabs.
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