London's Technology Companies Are Moving East to Canary Wharfby
Canary Wharf, the east London financial district, will have the strongest rental growth in the U.K. capital this year as technology companies seek room to grow.
The cost of leasing property will climb 12.6 percent to 44 pounds ($63) a square foot in central London’s cheapest office neighborhood, broker Knight Frank LLP forecasts, benefiting landlords Qatar Investment Authority and Brookfield Property Partners LP who gained control of the district last year.
Shoreditch, the hub for technology companies that’s north of the City of London, will slip to second place for rental growth after the cost of leasing an office rose almost 24 percent last year, Knight Frank forecasts. Midtown, where Goldman Sachs Group Inc. is constructing an office building, will rank third with rental growth of 9.6 percent before the 2018 opening of Crossrail, the high-speed rail project that will link Canary Wharf to Heathrow Airport.
Rents in Shoreditch now average 65 pounds a square foot compared with 70 pounds a square foot in the City of London financial district.
“Everyone assumed the tech firms could not afford rents that high,” said James Roberts, Knight Frank’s chief economist. “The more successful startups from five or six years ago have matured into larger, established companies with deeper pockets. They now need bigger, modern, high quality offices, and they can afford to pay to get what they want.”