Take-up of office space in London by the technology, media and telecommunications (TMT) sector is expected to grow significantly over the next three years, driving the need for more high-quality office premises in the UK's capital. A survey carried out for BNP Paribas Real Estate (BNPPRE) revealed that just over half (54 per cent) of all TMT businesses based in London intend to hire more staff by 2015, which will result in 1.2 million sq ft of extra office space being required above what the industry takes on in churn.
According to BNPPRE's estimates, demand for office space within the TMT sector will hit 4.65 million sq ft by the end of 2014, equating to half of the annual average take-up for the city. Paul Henwood, from BNPPRE's investment team, said the expansion of this industry is a good thing for property investment in London. "The predicted growth of the TMT sector provides a positive occupational backdrop to the continued strength of the central London investment market," he stated. Mr Henwood explained the research has highlighted several "emerging locations" within the capital that are proving popular among TMT firms, including Shoreditch, King's Cross, Stratford and Southbank.
"There is a great opportunity for investors to look more seriously at these kinds of locations, as well as the traditional core markets, but the entry price will be a key factor to a successful outcome," he asserted. BNPPRE is not the only organisation to single out the rise of the TMT sector, with Knight Frank also citing the industry as one of the fastest-growing occupiers in London's office market in its quarterly office review for the three months from April to June. The company noted that TMT firms accounted for over 30 per cent of all take-up in the City during the second quarter of this year.
However, Knight Frank revealed that, despite many TMT businesses occupying space in the City, many had "launched central London-wide searches and tended to be focused more on product than location". This supports Mr Henwood's suggestion that investment opportunities exist outside of core markets, as TMT companies are looking for space that meets their needs first and foremost, with location a secondary consideration.
- Tuesday 09 October 2012