Tech City — this part of East London and the City fringe has established itself in recent years as the third-largest tech start-up cluster in the world. But it’s no longer just for start-ups, with global giants like Google, Amazon and now LinkedIn relocating there.
Taking 514,000 square feet of space in Principal Place (Shoreditch), Amazon’s move, along with LinkedIn’s new 83,000 square foot Farringdon HQ, re-emphasises the popularity of the area for tech-focused, creative populous of London.
For the housing market, this means that demand in Shoreditch and Farringdon has been consistently high, as people move to the area for its central location, leisure and entertainment offerings and, now, work.
The focus for developers has been shifting over the last 10 years on the East part of town, and over the course of the past five years, we have seen schemes with higher specifications, design principles and hotel-like amenities matching what was previous been on offer in the western parts of the city.
Farringdon has been a standout performer in the London market. Since the Elizabeth Line (Crossrail) was approved in 2008, the area around Farringdon station has experienced an average outperformance of 34 per cent to its property prices within a 10-minute walk of the station. Combined with this, housing delivery in the Mid-City area is failing to keep up with official estimated need in each of the four boroughs (Islington, Camden, Westminster and the City of London).
Taken together, 3,231 additional dwellings were delivered during 2016-17, while the estimated annual need is 5,766.
This area has been earmarked as the one to watch, with high quality residential and commercial developments taking place.
Postmark, by Taylor Wimpey Central London, is one of the Capital’s last major Zone 1 development sites and a best-in-class example currently under construction. The project is perfectly positioned to benefit from London’s creative, legal and technology quarters. Residents will enjoy all that each of these eclectic neighbourhoods has to offer, from dining and culture to green open space.
With significant growth in London’s TMT sector, developers have had to respond to demand for higher levels of specifications and finishes in East London, resulting in a noticeable increase in the quality of the public realms and residents’ spaces. What is also noticeable is the shift in buyer demands, with them looking to balance their work and home environments with areas to socialise and keep fit. So entertaining spaces like communal games rooms, libraries and lounges are becoming more popular and the new norm.
With a move to flexible working, buyers are demanding the latest super-fast broadband, a feature said to be the most important technology in the home. Developers are listening, with schemes such as Long & Waterson in Shoreditch installing super-fast fibre optic broadband to allow residents to work from home with ease.
We have also seen that these buyers all want flexible layouts, preferring space that is adaptable to suit their lifestyle — whether that be a temporary office, a larger living room or perhaps another bedroom. They want to design their home according to their needs, being flexible with work or entertainment.
This is not only led by owner-occupiers, as we see many who know the area through work also see the potential in buy-to-let or rentals within a short distance of Tech City. Therefore, schemes close to Old Street, Shoreditch High Street and other commercial centres are preferred for those who like to walk or cycle to the office, and are not concerned about having a car.
Tech City and the wider Shoreditch area are now firmly part of the Prime Central London market, experiencing 32 per cent price growth over the last five years. This residential demand is balanced by the commercial and retail offerings which are springing up in the borough providing balance and organic growth opportunities.
(Raul Cimesa is Knight Frank’s Head of London New Homes.)