Member Article

High demand in London’s tech enclaves mean startups face highest rents in the world

Tech startups in London, along with their compatriots in New York and San Francisco, face the highest costs in getting their businesses off the ground due to exorbitant office rents in their respective creative districts.

The figures, calculated by Knight Frank, show that the cost of leasing and fitting out a 600 sq ft space in Shoreditch has grown to $66,706 per year due to intense demand for space, making it the most expensive creative district in the world.

The trendy East London enclave is closely followed by Brooklyn, New York, where 600 sq ft will set you back $62,735 per annum, and the Mid-Market area of San Francisco where rents now top £61,680 per year.

However, the property firm’s figures also highlight that startups opting for co-working spaces stand to save significantly with co-working spaces in Shoreditch available from $28,933 per year, representing a potential saving of $37,773.

James Roberts, Chief Economist at Knight Frank, commented: “As we head towards Brexit, tech start-ups are the sort of firms the UK will be looking to for future growth. So it is disappointing to discover London is such an expensive place for them to rent business space, at least if they want their own offices.

“Collaborative offices are consequently playing a vital role in offering affordable business space, but for start-ups to move to stage two as companies, they will ultimately need their own offices. London needs to be more affordable for tech firms if it wants a home-grown Google or Twitter.”