July 22, 2014

The changing property market – catering for tech start-ups’ needs

Whilst the larger deals like Amazon (210,000 sq ft letting in Holborn) and Google (new complex in King’s Cross) are in the headlines, the start-up end of the market is where the commercial property sector is struggling to keep up with these new entrepreneurial tenants.

The needs of a tech start-up company will be quite specific and growth expectations are high (tech sector growth and recruitment is currently outstripping that of the UK private sector average) but these young, entrepreneurial businesses are still fairly speculative at launch, often meaning that founders cannot predict whether their business will employ five people or 200 people over the course of a year.

The commercial property sector has been struggling to keep up with the demand of its new, energetic and expansive tenants. Traditionally, office space is let on a five-year lease for a specific demise with very particular parameters. Tenants are expected to spend a large amount of capital fitting out and redecorating the space to a level that complements their business.

Additionally, these tenants want a space that matches their modern brand and one that allows for flexible working. These types of fit outs are usually expensive and most landlords are not keen on the high-end speculative outlay and rarely are tenants able to offer this sort of initial capital expenditure.

So the property market is struggling to cater for the needs of the TMT market. Few traditional landlords are prepared to think outside the parameters of the usual leasing model which are, by their very nature, inflexible despite the fact that these tenants want flexibility.

The property market is slowly starting to change, with more and more flexible working spaces popping up that offer the privacy and exclusivity of the traditional office-leasing model, but with the flexibility and style of the co-working spaces that are proving popular with individuals and freelancers. There is a growing demand for this model and it is important that this area of the property market continues to grow, since London thrives on its reputation as a home of tech innovation.

For more information please visit or for property aspects of start up businesses, please contact Gareth Williams or for commercial aspects, please contact John North or Claus Andersen.

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