The Rise and Fall of Shoreditch
What does the name Shoreditch mean to everyone? Edgy, raw, dirty, trendy, industrial, arty, pretentious?
Over the years probably all of the above to be honest, however is Shoreditch what everyone thinks it is and is it all it’s cracked up to be?
Where it all started…
Shoreditch is a district in Central London that spans 3 boroughs, Hackney, Tower Hamlets and Islington, so covers quite a wide area, including those of Hoxton and Haggerston. With the urban sprawl of Central London over the years, Shoreditch was initially a suburb centred on its fantastic church and the roads of Shoreditch High Street, Kingsland Road, Old Street and Hackney Road.
In the 1500’s it was home to the first Elizabethan Playhouse and the timbers of this Theatre were moved by Shakespeare’s Company over to Southwark to be used in the creation of the Globe Theatre.
In the 17th century the area was then established as a textile powerhouse and in the 19th century the furniture industry and other industries thrived creating the beautiful Victorian warehouses we see today that became so trendy before the industries died off due to competition from other areas like Clerkenwell. The downward spiral that was created in areas like Shoreditch and Whitechapel in the late 1800’s created poverty, crime and prostitution and for many years it became a place not to go for most. The damage caused by the Blitz in the Second World War only exacerbated the deterioration of the area.
The Rise
One of the earlier visions of the potential in Shoreditch was that the area started to benefit from being the East End’s version of the West End in terms of theatres and music halls. Alas none of these survived the Blitz or later regeneration, however it started to show a fashionable side to it.
In the 1960’s, the Kray’s certainly saw the potential in the area, basically ruling their manor in true Mafiosi style with swathes of property acquisitions in the East End, fighting off the ‘Sarf London’ Richardson’s and making the likes of card games in the men’s loos in Shoreditch Town Hall synonymous with their racketeering. In the 1970’s and 1980’s the area started to become known for being an edgy centre of fashion, giving people an alternative to Soho and The West End. Small boutiques opened up between the Pie ’n’ Mash shops and the ‘unheard of’ Curry Houses creating an eclectic mix and giving the area an ‘alternative’ vibe. In the 80’s and early 90’s saw the area embrace the rave and acid house music scene with nightclubs such as Whirligig in Shoreditch Town Hall, 333 Club and Electricity Showrooms.
The area was becoming more and more eclectic, the old Victorian warehouse styles in the area being contrasted with newer 70’s and 80’s style concrete buildings with its bare concrete slab walls becoming a mecca for street artists. During the early 90’s, artists and students started to flock to the area as it was cheap to live, due to the shabby Victorian flats and brutalist concrete jungles — the pubs were thriving with a mixture of artists, musicians, fashion students and older locals. Films like Lock Stock & Two Smoking Barrels made edgy East London areas like Shoreditch cool and by the end of the 90’s it became one of the most popular destinations to go out at the weekends and the ‘wannabe’ middle classes started coming in their droves. Nightclubs like Plastic People, Herbal and Aquarium started the trend where XOYO, Cargo and Queen of Hoxton have taken things to the next level and the amount of bars and restaurants in the area have increased substantially since the opening of the original Cantaloupe Bar in 1995.
Property Prices
Whilst the area was being fought over by gangsters in the 60’s, 40 years later Shoreditch became an area worth fighting over for different reasons. The rise in Shoreditch becoming a popular destination and the demand to live and work close to Shoreditch increased from around 2000. Values in residential property steadily increased with average prices going from just over £175,000 in 2000 to double this figure in 2010 with a slight drop in 2008 when the world markets crashed.
Commercial property values were slow to rise as Shoreditch was still a fringe area like Southbank that only certain industries wanted to be located there and prior to the crash you could still acquire some fairly basic space for under £25 per sqft. In fact when the Lehman Brothers fiasco happened and the market was searching high and low for tenants to take their newly emptied buildings, I remember securing a 2,500 sqft floor in what would now be seen as being a very cool warehouse for nil rent for 2 years, just so the head tenant could remove their rates and service charge liability.
What happened from the start of 2010 was the catalyst for what we see before us in Shoreditch today. Lots of people lost their jobs, companies were cutting costs left, right and centre and if they had a lease event they would use it as leverage to go to fringier locations and take space at much cheaper rents. On top of this some clever people in tech came out of the woodwork and started to develop new pieces of software and things called ‘apps’ after seeing the same thing happen in the States with Silicon Valley. They took the same inspiration with its relaxed attitude to fashion, requiring physical bases for their start-up companies but using state of the art laptops to work from any location that had a Wi-Fi connection, something that cafes were now offering.
Then in 2011, Google decided to take an old dilapidated building at 4–5 Bonhill Street that used to house a shipping agent and created a 25,000 sqft tech hub. This offered the techies a place to collaborate and perhaps the first proper co-working areas was born in London. Start-ups needed the expertise and financial platform that Google was able to offer them and this started the real rise of Shoreditch. They didn’t want to work in boring corporate style offices anymore, so the old Victorian warehouses around Shoreditch offering that ‘Manhattan Loft’ style space were perfect for them and they snapped them up in their droves.
Landlords suddenly found their buildings were sought after and providing they were able to accept the lack of covenant strength from their tech companies, they were able to let their space and gradually increase rents as the stock vacancy levels started to tumble from 8.4% in 2011 to 4.1% in mid-2017. Average rents went from £30 per sqft in 2011 up to just over £53 per sqft at the start of 2017.
From a shabby area made up of small local landlords and independent developers who acquired properties that no-one else wanted, it quickly turned into a playground for large developers, institutional landlords and corporates and made shabby into shabby chic. But has it now taken the fun out of Shoreditch?
The Fall
What used to be bohemian about Shoreditch has now just become run of the mill. Any artists left are more commercial and less edgy and when some of the cafes are now Pret’s, EAT’s, Starbucks and Café Nero’s then you know an area has lost it in terms of it being uber cool. The artists have been driven out by the high cost of living with average flats commanding over £2,000 a month (that’s a lot of edgy paintings to be sold just for a bed, let alone a Frappamocchacino Skinny Latte at £5 a pop).
They’ve gone to the less trendy (for now) Hackney Wick, the musicians are more likely to be seen on X Factor rather than at their local gig as the bars outnumber the live music venues by about 40 to 1. Alexander McQueen (RIP) once said back in 2003 that if you walked into a bar in Curtain Road now it was like walking into part of Essex. That was 15 years ago…imagine what it’s like now for the old Shoreditchians (if you can call them that).
In late 2014, developers cottoned onto the fact that Shoreditch was becoming a destination location for office occupiers and started to work up new developments to capitalise on the increase in rents. They were also promised by the then London Mayor Boris “I don’t lie about anything” Johnson that Silicon Roundabout as it was being called would have an Internet Superhighway. Fast forward 4 years and that didn’t really happen and Boris got called out for another one of his lies involving Brexit and the NHS.
In 2015 and 2016 large developments such as the White Collar Factory, Principal Place, C Space, The Bower and Alphabeta were constructed taking the ‘under construction’ figures to over 1.3m sqft. Whilst a lot of these buildings let quite quickly and in some cases the earlier delivered schemes being pre-let before hitting the market, vacancy rates at the time of writing stand at 5.5% but this figure is expected to rise to 7%. This means there is over 1.5m sqft of space available, with some large schemes to hit the market over the next 2–3 years.
The stats show that since the dreaded B word (Brexit…Shhhh!) demand has dropped, which is not really too surprising considering the uncertainty flying around at the moment. How long this will last is anyone’s guess (if the Government don’t know, then how the hell are we supposed to know!?), however with a lot more space coming onto the market in the next 2–3 years, now is not a good time for demand to drop otherwise what could be a fall, to coin an American phrase, could turn into a long winter.
However with Hammerson and Ballymore ditching their high rise tower scheme for Bishopsgate’s Goodsyard development for a more ‘Shoreditch’ style offering, perhaps the Fall will turn to Spring and Summer after all?
