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If you ask most property professionals where the demand for office space is at the moment they will tell you all about media space. Converted warehouses with exposed brickwork and stripped-back ceilings represent the kind of space that all young, dynamic companies want to occupy.
With such rapid growth of TMT (Technology, Media, Telecommunications), the sector has contributed to a great demand for office space in London. The sector has therefore been hailed by many as the saviour of the London office market, given that the traditional occupiers have suffered since the start of the recession in a difficult economic climate. The TMT market has managed to counter the recession and has seen tangible growth.
The main increase in demand has been for media office space in Old Street and Shoreditch. Old Street is in the heart of what has become known as “tech city” attracting all manner of media companies to the area and hence creating high demand for office space in Old Street.
According to a survey undertaken by one of the major UK property consultants the whole of London could potentially benefit from this growth. It is clear that preferred locations do exist. Traditionally media companies have been drawn towards Soho and Covent Garden. However, recently demand has been highest for offices in Old Street and Shoreditch. New emerging locations are now starting to appear as TMT companies are getting priced out of the area with rents for prime offices in Shoreditch reaching north of £40 per square foot. The main emerging areas are Southbank, Clerkenwell and Kings Cross.
Mismatch between tenant aspirations and market rents
This may be something that is always going to arise as tenants often tend to think that they can get more for their money that they actually can. This has been compounded for TMT occupiers in areas such as Shoreditch where rents have doubled in some buildings over the last few years. Many tenants find it extremely hard to accept that to take office space round the corner from where they are at present will cost them double what it did when they signed their lease a few years ago. The reason for this rise is down to a mismatch in demand and supply. Media companies want to be in a certain type of building in a certain area, often in an office in Shoreditch or Old Street. There will always be a limited supply of these offices as it is very hard for modern developments to replicate the character of the historic warehouse spaces.
Morgan Pryce’s role in the TMT market
Morgan Pryce, the London-based tenant acquisition agent, works with many companies within the TMT sector. Tom Lax, Senior Surveyor at Morgan Pryce, says, “it is key when working with a TMT company to fully understand their requirements, especially the type of space they wish to be in”. It is often a learning process searching for a property and the tenant may need to look at a few properties before it can fully understand what will work best for them. It is Morgan Pryce’s job to advise the tenant from the beginning to the end of the process of the search for their new office.
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 the tenant.