Despite Brexit Uncertainty, Tech And Media Companies Keep Flocking To London
It has been just over two years since U.K. voters made history when they voted to leave the European Union after a 43-year membership.
While many have expressed concern about Brexit's potential impact, that hasn't stopped businesses from investing in office space in London. London’s office market is seeing increased demand, with the majority of interest coming from global companies within the tech, media and telecommunications sector.
In fact, demand for space increased after the Brexit vote. Throughout London, leasing figures post-Brexit have hiked 22% above the 10-year average. In central London, office leasing activity reached 13.8M SF in 2017, Knight Frank reported. While many predicted that Brexit would deter businesses from operating in the U.K., it seems the opposite has occurred. London's history and reputation as a hub for creativity and innovation continues to attract companies to the city.
There has been a domino effect when it comes to tech and media activity in London. For several years, the city has attracted tech, media and telecommunications, or TMT, companies due to its proximity to universities with ripe, young talent. These companies also want to be around people and organisations with similar missions, and the London office landscape offers the proximity they are looking for. The idea that “creativity is contagious” permeates London’s TMT sector.
Facebook’s recent announcement that it would double its London office space is the latest vote of confidence in the market. The company will pre-lease 611K SF across three buildings in King’s Cross which are slated to open in 2021. This will bring Facebook’s total lease exposure in London to more than 1M SF, a record held by only six other occupiers in the city.
There is a strategy to Facebook’s London expansion. Last month, the company announced plans to send artificial intelligence researchers to London, in addition to three U.S. locations. The company has plans to further grow its already-established brand in London. Several of the company's concepts, including the company's work tool Workplace by Facebook and VR headset Oculus Go, were born and bred in London.
Google also recently expanded its presence in London. In 2017, the company announced its decision to build an 870K SF London HQ. The building, which is valued at £1B, will hold up to 6,000 employees. The building has gained attention throughout the architecture community for its “groundscraper” design, because it is expected to be as long as the Shard is tall.
“It is another clear sign that London is open and remains entrepreneurial, international, and full of creativity and possibility,” London Mayor Sadiq Khan said.
At a time some have lost confidence in U.K. real estate, the City of London has welcomed these companies with open arms. But uncertainty still lingers, even among elected officials like Khan.
"I want clarity from my government,” Khan said. “I want clarity from what will happen once we've left the European Union. But the underlying strength of our city is still there."
This feature was produced in collaboration between Bisnow Branded Content and Gowling WLG. Bisnow news staff was not involved in the production of this content.