London’s Silicon Roundabout is failing to attract some of the UK’s hottest technology startups due to the high cost of rent, finds research from accountancy group UHY Hacker Young.
Costs are just too high
Located between the East End and Old Street, Silicon Roundabout is famous for attracting the world’s biggest names in digital, including Facebook, Amazon, Google and Intel.
However, with rising rents and a lack of affordable office space, some of the UK’s brightest minds are turning their backs on EC1V, with the accountancy firm finding that startup generation has fallen by more than a third in the last year (year ending 31st March 2015), from 15,620 to 10,280.
According to Hacker Young partner Colin Jones, the area’s steep increase in rent is allowing other areas to become the home of new tech talent, including City Road in Central London.
‘‘Silicon Roundabout has almost become a victim of its own success,’’ said Jones. ‘‘By attracting larger firms into the area, rents increase, available space decreases, and the smaller start-ups that were initially attracted to the area are forced out into neighbouring areas.’’
The accountancy group also discovered that startup numbers in City Road increased 479 per cent in the last year, from 1,450 to 8,400, but is adamant that Silicon Roundabout is the official home for UK tech firms.
‘‘Silicon Roundabout is still at the forefront of national business creation, and it is still the epicentre of the UK’s technology industry, attracting both start-ups and larger firms to the area, such as Cisco and Amazon,’’ continued Jones.
Jones added that the majority of Silicon Roundabout’s new businesses will be micro-firms, including ‘‘one-man bands such as individual programmers or media consultants.’’
Borough and Bankside is also struggling
Another location which has been experiencing the same problems as Silicon Roundabout is Borough and Bankside (SE1).
Despite maintain its place as one of the top three areas for startup creation, it experienced a 16 per cent fall in the number of new companies from 5,850 to 4,920 over the 12 months. Jones however, believes that the area has enough in its arsenal to attract new firms.
‘‘Over the past few years, Borough and Bankside have been at the centre of large regeneration programmes that have attracted many professional service firms to the area,’’ commented Jones.
‘‘Borough Market has been extensively redeveloped and the construction of the Shard as the tallest building in the EU has put the area on the map internationally.’’
‘‘Many creative industries, such as architecture, design, and PR firms, are drawn to the area by Borough Market and Bermondsey Street, both famous for their wide selection of exotic food,’’ ended the partner.