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The burgeoning TMT sector is no better demonstrated than by some of the actions by certain companies in London over 2012: LinkedIn, Skype, Warner Bros, all of whom have either taken new offices or renewed the leases on their current premises.
Internet-based businesses such as LinkedIn can, in the space of a typical 5-year lease, outgrow their office space astronomically. Five years is standard in lease terms, but can be a long time in terms of the technology and media sectors.
Many of these offices are based in a particular area of the West End and the City, which, since 2010 has been self-branded ‘Midtown’. Encompassing Bloomsbury, St Giles and Holborn, the area has seen an increase in returns in property market investment – 8.7% in 2012. This is higher than offices in the City; and the capital values in the City were also less: 2.1% in comparison with ‘Midtown’s 4.1%.
The area is clearly proving popular with investors and occupiers alike. Occupiers are driving up demand in the area, which offers a variety of office space to different kinds and sizes of tenants – spreading the risk for the investor. And the facts speak for themselves: availability of space is low (lower than Southbank, the City and the West End), confirming the area’s popularity in terms of investment, whether UK or overseas.
Tom Lax of Morgan Pryce comments, “Accessibility to this area is a benefit for tenants, with good transport links, and a good choice of office space. We are seeing lots of up-and-coming companies as well as well-established expanding ones looking for, and taking, space here.”
Crossrail will only improve the area’s advantages. With two Crossrail gateways in or around Midtown, many more people will find themselves within an easy commute of the area.
Morgan Pryce is a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.