Affordable workspace - a challenge for UK Tech
UK Tech is a World Leader, But More Needs to be Done to Provide the Nation's Firms with Affordable Workspace
UK tech is world leader, but more needs to be done to provide the nation's firms with affordable workspace.
As the 2018 Tech Nation report shows, the UK continues to be a world leader in digital innovation. The nation's tech sector is worth £184 billion and employs 1.07 million people, more than any other European country.
The UK is also home to one of the world's most vibrant and successful start-up communities. Venture capital funding into UK tech businesses almost doubled in 2017, reaching £4.5 billion. Innovative, fast-growing UK tech firms such as Improbable, a company whose software helps simulate large scale virtual worlds; and TransferWise, the fin-tech unicorn specialising in peer-to-peer money transfers, are renowned the world over and backed by some of the biggest names in tech.
Beyond these firms, the creation of new tech businesses in the UK as a whole has reached an all-time high. Data from Companies House indicates that more than 10,000 tech businesses were incorporated in the UK in 2017, up almost 60% on 2016. Every region of the UK has experienced an increase in the number of tech incorporations in the past year, underscoring the importance of tech to the UK economy as a whole.
However, as the Tech Nation report also shows, one of the primary challenges faced by the UK's tech firms is access to affordable workspace. Only 42% of respondents to the Tech Nation survey rated positively their access to affordable workspace, with firms in London, the Thames Valley region and Bristol particularly negative about the availability of suitable office space.
This is a major cause for concern. Just as the dynamism and long-term success of a city can often be gauged by looking at the affordability of its housing, the ability for firms to house their businesses in suitable workspace is an essential enabler of growth. Being able to co-locate alongside similar firms is fundamental to the spill over effects which have catalysed the rise of tech clusters the world over, from Silicon Valley to Silicon Roundabout.
Yet on the affordability of its workspace, the UK performs worse than its European rivals. The costs of office space in London continue to exceed any other European tech hub. Even outside the capital, many of the UK's other tech centres are more expensive than their continental counterparts – prime rents in Manchester, Birmingham, Edinburgh and Bristol, for instance, are all higher than those in Madrid, Berlin, Barcelona and Amsterdam.
One way firms have sought to mitigate the high costs of workspace in the UK's tech hubs is to base themselves in co-working or flexible spaces. Tech start-ups and scale-ups have been enthusiastic adopters of these spaces, as they allow members to rent small chunks of space on a monthly basis and scale up their commitments as their businesses grow.
These spaces also offer members the chance to rub shoulders with other members of the tech community. At the Trampery's co-working space in London's East India Docks, for instance, members are offered a programme of yoga classes, wellness workshops and cocktail evenings to help expand their network.
Interest from the tech community has helped fuel the rise of flexible and co-working spaces across the UK. There is now around 8.5 million sq ft of flexible space in London, and a further 2 million in the rest of the country.
If the UK's tech community is to continue to grow, however, more needs to be done to provide firms with access to affordable, flexible and high-quality working environments. Across the nation, a number of innovative developments have demonstrated that providing space for start-ups and scale-ups can lead to the reinvention of the urban landscape.
Here East, for instance, the site of the 2012 London Olympics broadcasting centre, has been transformed into one of largest technology and innovation hubs in Europe. The development includes Plexal, a 68,000 sq ft start-up co-working space, which provides members with a variety of workspaces and professional services. Plexal's presence in the development has helped attract firms like BT Sport and the research group of automotive giant Ford.
In Manchester, the 200,000 sq ft former distribution centre of Sharp Electronics has been reimagined as a tech and media workspace, housing more than 60 firms and equipped with dedicated production facilities. Elsewhere, the redevelopment of Alfred Bird's custard factory in Birmingham has transformed the Victorian industrial district into one of the UK's most thriving tech communities.
Developments like these showcase that providing affordable workspaces to tech firms can revitalise urban spaces, benefiting the wider community. If the UK's tech firms are to continue to lead the world, more needs to be done to provide them with access to spaces like these.
This article was written by Owen King, Director of Occupier Research, and Michael Davis, Tech and Media Sector lead.