London’s Space Race
Can a city with an increasingly unaffordable centre really accommodate a startup scene? The evidence suggests not. But an intense period of regeneration in some unlikely places in the coming years is underway and could yet reshape the city.
I used to get a nose bleed if I went west of Farringdon.’ Hugh Thomas, founder of Ugly, a drinks startup, is referring to the location he and many like him have in recent years considered the middle of London.
The business activity around Old Street, along with the gentrification of nearby residential areas over the last 15 years, has resulted in the emergence of a new axis point for the city. This means places like Farringdon and Shoreditch, rather than the West End or ‘city core’, have become the city centre for many.
London now faces a new challenge. Commercial and residential property prices have been rocketing at unprecedented rates, making affordable space to live and work harder to find, even in the east.
Thomas and co-founder Joe Benn recently moved Ugly from Old Street to Elephant and Castle. This means going from paying £300 per desk, for a three-man team in a cramped co-working space, to taking over a shipping container that costs £750 a month and fits seven.
The issue of space is now widely considered to be the biggest obstacle in continuing London’s viability as a home for creativity and fast-growing businesses. Bigger even than access to money and talent.
As our map shows, commercial rents in London have exploded in just five years. Knight Frank estimates there’s currently a shortage of 10 million square feet of office space given the demand, leaving startups especially frustrated.
Thomas and Benn admit being initially uneasy about moving out of Shoreditch. ‘We were unsure whether there would be the same atmosphere, and whether talented people would be up for being based here, but it’s worked so far.’
They found 35 neighbours in the Elephant and Castle co-working space, other startups also squeezed into windowless shipping containers. A group which includes yoga instructors, food operators, advertising agencies and creative studios.
Speed of gentrification
Although the shipping containers will be ripped down for the construction of new buildings in two years, the legacy of the temporary tenants is expected to be the embers of a startup energy in Elephant and Castle that contributes to changing the perception of this part of London.
There’s a high chance this previously unpopular patch of south London will quickly become
desirable, and consequently unaffordable. The speed of gentrification in London has ratcheted up hugely in the last decade. The worry for many is that gentrification is outpacing the ability of startups to make a place home for a decent amount of time. It is creating a new kind of property growth spurt in London: outwards and upwards.
Amping up density
Although London may feel overcrowded, it is actually roomy compared to other modern cities.
Anathema to Londoners perhaps, there’s a growing belief that city has to embrace building upwards. Even doubling London’s density would still leave it more spacious than Barcelona.
That reluctance is understandable given how the first phase of this ‘densification’ has resulted in the sterile ‘luxury’ towers sprouting up across the city.
Developers and architects know this isn’t the only option. A growing body of thought is for smarter ways to make denser places more interesting and fun, and crucially, the value of seating creatives and small companies next to big ones.
However, equally interesting is the prospect of transforming areas of London from undesirable backwaters to areas people want to live in. It could result in a newly drawn city, made up of multiple new hubs with the idea of a unified centre a thing of the past. More unlikely places than Farringdon would become referred to as ‘the centre’ for many.
Cheap rents in the Deptford- Peckham-New Cross triangle have made this patch an unlikely successor to Shoreditch. Alex Proud, a gallery owner in Camden believes it reflects the appetite to find new artistic and creative hubs. ‘Peckham used to be where you went to buy a gun, not open a studio,’ he says.
Son of Crossrail
It’s hoped big infrastructure projects will provide a boost to the regeneration of these areas. The new rail routes of Crossrail and Crossrail 2 will open up the outer areas of London. With commercial London historically having grown east and west from the centre, hopes are particularly placed on Crossrail 2 to bring the north and south into play.
The promise of Crossrail 2 is that it will instantly make a place like Tottenham a contender as an economic hub. The success of the Overground in opening up Hackney, for example, is whetting the appetites of developers looking at the proposed stops on Crossrail 2.
And like Hackney, it’s expected young creatives will rush to take advantage of cheap rents in an area like Tottenham, especially if sufficient office space is provided locally.
Property speculators are quick to rebuff scepticism towards the viability of turning around outlying hubs with the example of Canary Wharf. It’s an outpost that defied the sceptics to transform a disused quarter by the Isle of Dogs, and convinced many of the world’s big investment banks to relocate their headquarters there.
In the next few years the role of the startup in the city will become clearer, in how integrated the startup and creative scene will be with the core of London. We look at the role of startup as new parts of the city are modernised and remade to absorb demand for space.
Whether new regeneration projects, new infrastructure and the emergence of new centres can grow faster than demand is a moot point (Crossrail 2 was the result of a previous project being deemed insufficient by the time work got underway).
It’s created the feeling that London is in the midst of a giant experiment, one that will put the ability of planners under the microscope; as well as changing perceptions on often-neglected neighbourhoods.
The most optimistic outcome is communities where startups, big corporates, low rent and high rent co-exist in the same areas. This would potentially prove that such diversity presents long-term financial value for everyone, including landowners.
This could well be a fantasy. Instead startups may have to become adept and imaginative at finding new patches of the city. They will just have to brace themselves for relocating once the rent renewals come up, and just hope the landlord is polite enough to thank them for contributing to make the area they occupy more valuable.