April 24, 2015
Rising commercial property costs driving small businesses out of London 0
The vast majority of small businesses in London and other parts of the South East are considering relocating over the next five years because they are frustrated with the lack of appropriate facilities and soaring commercial property costs in the region. A new study from the University of Sussex’s business incubation network Sussex Innovation claims that nearly two thirds (63 percent) of small businesses, rising to 78 percent of technology startups, believe their future may depend on leaving the capital. The study claims this threatens the viability of the Government’s flagship Tech City hub just months after it announced a new scheme to attract firms to the area. The research is based on a study of over 500 business owners and leaders in London and the South East and was presented at the launch of Sussex Innovation’s new hub in Croydon.
Respondents cited rising property prices (78.5 percent), difficulties accessing investment (26.6 percent) and securing talent (24.1 percent) as some of the big reasons behind their consideration of relocation. The study cites property agents Knight Frank who reported that prime office rents in London’s Square Mile are now higher than their pre-recession peak. Rents at the end of the first quarter of 2015 were £65 per sq ft, compared to £63.50 per sq ft in the third quarter of 2007. Average rental prices in Shoreditch and Clerkenwell were up 5 percent in 2014 to £52.50 per sq ft and are predicted to rise by another 9 percent in 2015.
Mike Herd, executive director of Sussex Innovation, said: “With office rental costs soaring in London, it’s no surprise that entrepreneurs are looking to move out of the capital. At the same time, we’ve seen local businesses moving away from areas like Croydon due to a lack of flexible facilities designed to support businesses during rapid growth.”