Capital Watch the Latest on London Real Estate
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CAPITAL WATCH THE LATEST ON LONDON REAL ESTATE How tech has powered up London’s success PAGE 03 ISSUE 01 • 2018 FEATURE SET • 12 IN CONVERSATION • 25 TRENDING • 30 Twitter: Alternatives Theo Blackwell Pavegen @CushWakeUK London’s CDO Welcome What’s Inside Welcome to our June edition of Capital ALTERNATIVES Watch! We’ve timed the launch of this • Student accommodation edition to coincide with London Tech Week, • The central London private celebrating creativity, talent and innovation healthcare market in London’s tech scene. Over the past five years, tech has • Self storage become of incredible significance to London’s property market and industry. As well as being the sector driving large-scale office requirements, it is also helping to change both the form of property and how we do business. Known from the start PAGE 12 as an innovator in the design of workspace, the tech sector can also largely take credit for the emergence of one of the biggest real estate trends in recent years: office as a service. From humble roots in co-working facilities for tech start-ups in the East End to the major disruption that WeWork (‘a tech company’) is now having on the market, tech is reshaping the built environment. Meanwhile PropTech is now starting in earnest to deliver vehicles for LONDON DNA #TRENDING change in how we manage and transact Elephant & Castle: Down the garden path real estate assets. We discuss these and Authentic & dynamic other issues in the pages which follow. As well as technology, we also look at PAGE 19 PAGE 30 Alternatives, a real estate sector that has witnessed considerable form of late, and COVER STORY THE HOT ISSUE a category from which new mainstream How tech has powered Risk, communities and sectors might soon emerge. Finally we take up London’s success PropTech a look at the development of Shoreditch and Elephant & Castle. PAGE 03 PAGE 08 As always, drop me a line if you’d like to discuss any of these topics further. ROUND-UP SPOTLIGHT ON... London at a Glance Capital gains – the winners Richard and loser of the local elections PAGE 10 PAGE 11 LONDON IN FIGURES IN CONVERSATION Richard Pickering London’s tech scene With Theo Blackwell, Head of Futures Strategy, Editor of Capital Watch London’s Chief Digital Officer [email protected] PAGE 21 PAGE 25 PAST, PRESENT, FUTURE VILLAGE LIFE Find us online: cushmanwakefield.co.uk/london Shoreditch Clerkenwell Twitter: @CushWakeLDN Photography page 25-29: Tom Campbell Design: Ascend Studio PAGE 34 PAGE 39 CUSHMAN & WAKEFIELD 03 COVER STORY COVER STORY How tech has powered up London’s success The growth of the tech sector in London has been one of the capital’s recent success stories. ack in in 2010, the emergence is now one of the top three global tech of space in central London, second Bof a cluster of fast-growing tech cities alongside San Francisco and only to banking and financial services. startups in east London was brought New York, having become a magnet This equates to more than 13% of to attention of the then Prime for startups and programmers. Since total leasing volumes – a doubling Minister David Cameron. Winding Tech City was launched, technology on the preceding five years – as forward, this sector is now feted as has become more integrated tech behemoths such as Google, the darling of the economy, having throughout all industries on the back Facebook and Apple have committed fuelled post-recession job growth. of a wave of digital transformation. to ever larger tranches of space. It’s Tax breaks for investors in early-stage New sectors such as fintech and legal easy to see the effect of the sector companies along with the sector’s tech have emerged, focusing largely on the physical workspace, with own Tech City UK body have helped on artificial intelligence and digital connectedness and collaboration support the growth in the number of automation. The UK is now home to at the heart of current workspace startups, with high-profile advocates 22 of Europe’s 57 tech unicorns, the design. Significantly, tech employers, championing the capital’s tech talent. clear majority of which are based driven by a need to attract the Of course, that’s not to say that in the capital. Nearly £3 billion was best young talent, have also set the London’s tech sector didn’t exist invested into London’s tech companies benchmark for “cool” space. Whilst prior to 2010 - but it was still very in 2017, which now employ more than slides and hammocks have since much under the radar, due not least 300,000 people in London. virtually disappeared from fit-out to its epicentre being located in an This success has had a clear impact checklists, the reinvention of what a underdeveloped quarter of London on London’s real estate market. corporate workspace can look like has not typically associated with fast- Demand from technology companies acted as the catalyst for a movement growing businesses. shored up the central London office that has spread far beyond the By Elaine Rossall, Just as London’s tech scene did not market in the years following the bounds of the tech industry. Head of UK Offices begin with Tech City, it also did not financial crisis and the sector is now In the following pages we explore Research & Insight end there. Moving on from the cluster a core source of office leasing activity. the major factors in London’s success elaine.rossall of digital business in east London, In the five years to 2017, the tech as a tech hub and the challenges and @cushwake.com London’s tech sector is booming and sector leased over 7.2 million sq ft opportunities that lie ahead. CUSHMAN & WAKEFIELD 04 COVER STORY Access to talent In an industry driven by talent, London has developed a reputation for attracting a high-quality pool of labour from all around the world. London’s global status and top-class universities have created a magnet for foreign creative minds, building on domestic talent and ultimately accelerating the growth of the sector. A shortage of talent was cited as the number one challenge facing London tech according to a recent Tech London Advocates survey (cited by 29% of respondents). Brexit is creating additional uncertainty about the ability of the sector to retain its vital international workforce. The demand for digital skills is proliferating beyond the tech sector. Tech jobs are in high demand across talent. In 2016, just 2% of all A levels all sectors, which, combined with the taken were in Computer Science: 80% of the expansion of large tech companies, The Mayor more needs to be done to make top 25 is exacerbating the skills gap. 80% of of London it appealing to a wider audience. the top 25 in-demand skills reported has also Universities and schools adapting to in-demand in a survey by LinkedIn related to produce the right skills is one possible skills tech or data. recognised route, but the development of skills reported in Concerns around talent are not this though organisations such as Makers a survey by just Brexit-related. The tech sector shortcoming Academy, where you can learn to LinkedIn needs to diversify, with an under- and has code in 12 weeks, and Code First, representation of females and BAME launched a who recently launched a programme related to employees in the London tech scene. to teach 20,000 young women how tech or data Female tech workers comprise only £7 million to code for free by the end of 2020, 10% of tech professionals in the UK programme are essential to bring through the and, in a recent survey, only 13% of to inspire next generation of talent. The Mayor females had a desire to work in the young of London has also recognised sector. For London to continue to Londoners the current shortcomings and has compete globally there needs to launched a £7 million programme be greater integration of education to enter the to inspire young Londoners to enter and industry to nurture home-grown sector the sector. CUSHMAN & WAKEFIELD 05 COVER STORY Startup ecosystem London has developed into Europe’s capital, and one of the leading global cities, in terms of the startup ecosystem it supports. Attracted by the availability of funding, world- class universities, market reach and the ability to collaborate with Access to capital influential organisations, London and funding has become the European city of choice for startups. The numbers London’s position as the leading global London’s Artificial Intelligence of active startups vary depending finance hub provides ample access to (AI) companies also saw elevated upon the definition, but there is no funding, while the large tech companies levels of funding in 2017. Big deals doubt that London has one of the located in the capital are sources of for companies such as Babylon highest concentrations of startups expertise, capital and potentially direct Health (£47.5m), Callsign (£26.9m) in the world. Businesses have now investment. Startup Genome estimates and Starship Technologies (£13.9m) established themselves in clusters all that early stage funding per startup in saw investment in London AI over the city - not just in Shoreditch. London is $451,000 compared with a companies reach over £200m London’s digital tech industries global average of $252,000. The vote (>50% more than 2016). grew one-third faster than the wider to leave the EU has not diminished the It’s not just VC funding where economy “according to Tech Nation capital targeting the UK’s tech firms.