Fighting the talent war used to be a lot simpler: you offered an engaging job at a high salary and workers would flock to your offices. These days, however, getting the best people to work for you requires a lot more than a big pay cheque.
This is especially true in the creative and technology industries, where competition for both graduate and experienced talent is intense. The clamour for the best staff in those sectors is having an effect on occupier requirements, as employers seek to compete on working conditions.
For these industries, it is now essential for companies to be in the right location with the right offices to attract the right people. One area that has been successful in attracting tech and creative businesses is the city fringe and particularly Shoreditch.
A large portion of these occupiers now see Shoreditch as ‘the place to be’ for a few key reasons. This trend has been noticed and acted upon by Investec, with the recent financing of significant developments in the area, such as the Stage and Scape Shoreditch.
First, employees want to live and work in a place that is a cultural fit for them. Shoreditch and the surrounding area is not only a hot spot for creative companies, it has become a cultural hub.
Second, the area is serviced by some of the best transport infrastructure in London, with fast existing links in all directions and Crossrail coming soon, it is perfectly placed for employees to commute from all areas of London and the surrounding towns.
The next key driver is the size of businesses. Technology companies are renowned for their entrepreneurial spirit and start-up culture. But, this means many companies tend to be significantly smaller and therefore less able to handle the West End rents that have swelled to new heights in recent years.
For decades, the West End, particularly Soho, was where all TMT companies aspired to be. However, with rent likely to be around £85/sq ft, many companies have beenpriced out. Shoreditch has picked up a lot of that demand, with rents in the area often maxing out around £60/sq ft.
Finally, Shoreditch and the surrounding area benefits from a cluster effect that often comes when the largest companies in particular sectors relocate to another area. With Amazon signing for Brookfield’s Principal Place and the continued success of Tech City, many smaller companies will inevitably follow to be near their peers. These companies often act like anchor tenants for the entire area.
With sky-high rents in the West End, a huge redevelopment pipeline in King’s Cross and skyscrapers flying up in the City, there are very few places in London that are yet to be fully tapped and one of them is Shoreditch. The strong growth in occupier demand, excellent transport links, relatively low rents and a perfect cultural fit for many tech and creative companies has left significant opportunities in Shoreditch for dynamic investors, Investec included.
Simon Brooks works in Investec’s structured property finance team
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