TMT tenants turn away from heartland to King’s Cross and Aldgate. Nick Johnstone reports
Office take-up among TMT (technology, media and telecoms) tenants is slowing down across much of the West End, as rival locations benefit, shows research revealed today by Property Week.
“TMT”, a buzz phrase for many London landlords during the downturn, has begun to lose its allure for some traditional areas, shows Colliers International’s Media and Technology Monitor 2013. Meanwhile, locations such as King’s Cross and Aldgate are stealing a march.
Traditional media districts such as Fitzrovia — the area north of Oxford Street — and Covent Garden, are failing to retain and attract so-called TMT demand because of rising rents and the lack of options available to expanding occupiers, the data show (graph 1).
Both have lost occupiers in 2013, making overall stock absorption negative in those areas (graph 2). In Fitzrovia, just 56,000 sq ft has been let this year, compared with 201,000 sq ft in 2012. Relocations by big firms — for example, Saatchi & Saatchi from Fitzrovia and Facebook from Covent Garden — exemplify this trend (graph 3).
Google’s decision to develop almost 1m sq ft at King’s Cross Central has pushed take-up in the West End and Midtown market 41% higher this year than in the same period in 2012 (graph 4).
However, Colliers suggests this “Google effect” masks a drop in the number of TMT transactions across the two markets. In 2013 so far, there have been 89 West End deals, ranging from 264 sq ft to Google’s 860,000 sq ft (table, overleaf). In the same period in 2012 that figure was 143. In short, 40% fewer companies took space this year compared with last year.