Corporate relocation asserts its dominance as a key driver of London’s prime rental markets
Almost half of all tenants in prime London are renting due to employment relocation, demonstrating the increasingly important role of corporate demand in the prime rental markets across world cities, says the latest corporate lettings report by Savills.
Traditionally, the financial and insurance services sector has dominated the corporate relocation market with 50 percent of tenants working in this area in 2007. In the aftermath of the financial crisis they now account for just 39 percent of the market, signifying the shifting nature of employment in the capital. In its place there has been a rise in the number of technology industries locating in the capital, facilitated by the development of ‘Tech City’ in the east and the recent regeneration of King’s Cross.
Matthew Salvidge, Head of Corporate Services at Savills, noted: “London attracts companies from around the globe and remains one of the world’s most important centres for global commerce. Consequently, we have a diverse range of different tenants from all business sectors looking to relocate to areas throughout London.”
Over the next five years it is estimated that there will be an additional 368,000 employees in London, and around 25 percent of these will be accounted for by the technology industry. It is set to become the largest industry in central London, and growth in the sector across the UK will outstrip that of California’s ‘Silicon Valley.’
Compared to employees in the financial and insurance industry, who from 2007 to 2013 increased by 6 percent, tech industry employees grew by 19 percent over the same period.
“As the tech industry continues to expand, this extension in popular locations will continue and the demand for rental properties suitable for corporate relocation tenants will increase,” comments Sophie Chick, a research analyst at Savills.