PROPERTY TECH: Juliette Morgan, head of property for Tech City UK and a partner at Cushman & Wakefield – also leading the Tech London Advocates property group – reflects on the unintended consequence of east London’s tech success: higher rents. But she says tech business is now driving change in the way the property market itself operates.
I’ve been honoured to have a front row seat in the government’s Tech City initiative since 2010, and have since developed a healthy disregard for the Tech City versus Silicon Roundabout moniker discussions, as well as the Shoreditch versus east London debate on where Tech City is, or isn’t. In truth, technology and creative clusters are growing across London, from Canary Wharf to Silvertown Quays, and Croydon to Clerkenwell.
Where Tech City is doesn’t matter – what matters is only that its people are able to grow their businesses and are supported by their governments to do this, whether local or national.
Tech City was the brainchild of Rohan Silva, David Cameron’s policy advisor back in 2010. He, and others at No.10, set a tone of celebrating entrepreneurship, and built government support for the Old Street Tech City area. This was in response to local entrepreneurs who wanted a voice to inform policies that would help businesses do business better.
Coupled with the extraordinary vision of Hackney Council, UKTI and the London mayor’s office, the area has been served (some might argue over-served) by government at all levels and was always well on the way to being a significant home to digital and creative entrepreneurs. It has also help the attention of central government for the last few years.
Policy changes have been driven as a result of feedback from the entrepreneurial community: entrepreneur visas were championed, tax breaks were requested for founders and incentives proposed to encourage early-stage investors.
A further recent policy change also driven by community feedback was the introduction of the exceptional talent visa, which provides a fast-track visa route for UK digital companies who want to recruit world leading tech talent from overseas.
The government is still listening for policy ideas, providing regular access to No.10 via events such as the Tech City breakfast, or via the Tech City UK team. These policy changes support company formation and growth not just in Shoreditch: they apply to entrepreneurs across the UK.
There have been some unintended consequences of ‘shining a light’ on east London. Not least has been the corresponding rise in rents in the area. This, however, has to be seen in the context of what’s happened in London as a whole. It’s hugely important that Tech City remains a place where people can start and grow their businesses. The combination of new developments and so many companies competing for space at the same time has had predictable impacts on rents.
With limited success, most of my time in Tech City has been spent with developers and investors lobbying for softer rents, manageable deposits to enable growing companies to stay here; and for space to remain accessible and affordable where possible.
The most heartwarming response to these challenges has been the emergence of disruptions by companies in the tech sector keen to change the property sector. The area has birthed brilliant start-ups who are revolutionising access to retail, desk and commercial space, building management systems and architects’ design processes. This fusion of prop-tech has the potential to profoundly impact the market not just in Tech City but again across the UK, and further afield. Zoopla was recently valued at nearly £1bn – a further proof point of the success of the prop-tech sector.
This is an amazing opportunity for the property and tech industries to bring more transparency to a market that otherwise can hinder companies’ growth. A fundamental problem comes from the fact that the property industry is funded by pension funds seeking long-term stable rent income. Most of the startups and high-growth companies that characterise Tech City are not in a position to sign 10-year leases with big security deposits or fit-out costs.
London as a whole has responded with a plethora of co-working spaces, but invariably they aren’t a solution for companies who reach a size where they need private office space. It’s this ‘graduation’ from co-working or first office that is so painful relative to the funding of an early-stage company. Companies like Tower 10, spaciousapp and others are making it easier to find available commercial property online.
There has also been disruption in the retail space – Old Street Tube Station has been totally transformed by a fascinating partnership between Transport for London and Appear Here, a company offering short-term access to retail space (see photo). This partnership allowed companies who might otherwise have struggled to get a shop a chance to test their retail mettle in a place that has 23 million visitors per year.
Another local company, We Are Pop Up, provides a platform for access to shop space for just a day, or even display space in existing shops. These companies are innovating in retail as well as tech, making the streets and shops more interesting.
The upshot of all this: the tech industry is nibbling away at the property industry in many ways and changing the city around us. Government’s role remains to listen closely, help where it can, and get out of the way where it should. Tech City as a concept is growing: clusters are being built in cities across the UK, which government should tap into, support and help to grow. These clusters will drive the next waves of innovation across property, retail or in a completely new space.