Huge demand for office space in the capital as London start-up scene thrives
Average cost of London desk space more than double that of the rest of the UK with more businesses searching for offices in Victoria and Kings Cross
The capital’s burgeoning reputation as a hotbed for diverse and dynamic start-ups has contributed to a massive demand for serviced office space in London, according to research by office space search engine Office Genie.
The report found that internet searches for desk space in London are up 36% last year on 2013 with the average cost of desk space in the capital 129% higher than the UK average, with businesses currently paying £512 per month, compared to £224 in the rest of the UK.
Although Soho has always been a popular location for small and medium businesses, searches in the area were up a mere 14% last year compared to 2013, with many serviced offices at near 100% capacity. Searches for serviced office space in Victoria and Kings Cross, which have both seen significant regeneration, were up 106% and 60% respectively.
Similarly, searches for office space in Old Street and Shoreditch – the Tech City nucleus which is home to thousands of start-ups– had only risen by 19% and 22% respectively last year, which is thought to be due to a lack of supply.
Liverpool Street, which is said to host a growing number of fintech start-ups, has seen a doubling in demand for office space from 2013 to 2014. Likewise, searches in locations such as Clerkenwell were up 47% last year.
The report has also revealed a great disparity in the cost of the least and most expensive desk space across London, with a 180% difference in average monthly costs.
At £654 per month, Knightsbridge and Notting Hill are currently the most expensive, while Brixton offers the cheapest desk space in the capital at £233 per month. Holborn is almost 10% cheaper on average than its neighbour Soho, which remains expensive at £586.
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By district, North London offers the best value for serviced office space, with an average monthly cost of £406, just over 19% cheaper than the average. West London is the least affordable, with desk space on average £589 per month – 45% more expensive than North.
Head of strategy at Office Genie, Peter Ames, commented on the findinds:“The London start-ups and small to medium sized enterprise scene is booming and it seems every week a new tech or fintech company launches in the capital. For many business owners, London really does seem to be the only place to be, but that is putting a huge strain on the serviced office space market, with many areas seeing demand significantly outstripping supply.
“The worry is that the capital is struggling to cope with the demand for space, and inflated prices could leave many small business owners with little option than to base themselves outside central London. With cities like Manchester, Bristol and Birmingham thriving as alternative business hubs, and being able to offer much cheaper office space, it’s important that the London start-ups and small business community is catered for, or we could start to see a mass exodus of talent from the capital.
“For start-ups looking for cheaper desk space, sharing an office could be a cost effective and flexible option. In London, the average shared office desk costs around £432, which is 16% cheaper than renting a serviced office space. So sharing could be the most compelling answer for what is a race for space in a competitive market.”
Read our report on where to start a business in London here.