Technology and telecoms (T&T) companies have leased more office space than banking and financial firms in the EU for the first time, according to a report from property consultancy CBRE.
International technology companies – such as Amazon, LinkedIn, Skype and Mail.Ru – rented a total of 520,000 sq m of office space in the first half of this financial year, compared to 420,000 sq m taken up by the banking and finance industries in the same period.
This makes T&T companies the third most prolific occupiers of office space after the manufacturing and energy industry, commercial services and leisure industry.
The CBRE report, released Tuesday, states that the transition has been driven by technological advances and the growth of e-commerce, with smartphones, tablet computers and cloud computing all major factors in the expansion of the sector.
Sales of tablet computers alone are predicted to triple to 326m units by 2015, the report cited.
T&T companies have not been exempt from the financial issues afflicting much of the global market, but the amount of office space being leased by the sector has now recovered to just below pre-recession levels, with London, Berlin and Dublin the most popular destinations.
The CBRE report stated: “Some of the most successful companies are harvesting the fruits of their innovation and have hoarded substantial cash reserves despite the economic turmoil which they can use to fund their growth”.
The British government has been quick to tout London as an ideal home for technology companies, proposing the idea of a ‘Silicone Roundabout’ in East London, supported by substantial investments in local infrastructure and regeneration.
Commercial property investors, Resolution Property, bought Triton Court – once the HQ of Royal London Insurance and National Westminster Bank – for £43m in June with the aim of redeveloping the property for the technology industry.
Ironically, part of the £150m refurbishment will involve moving the main entrance from its grandiose façade overlooking The City, towards the industrial architecture of the area now inhabited by tech industries.
The building is set to be renamed Alphabeta, and the refurbishment will encompass some typically brash tech industry features, such as a cycle-through reception area, basketball court, film studio and roof terraces.
Robert Wolstenholme, a partner at Resolution Property, said: “Financial services are in a state of retreat”. “The creative world does not feel comfortable sharing a building with bankers. So, we had to reposition it physically and conceptually.”
Wolstenholme said his office model “is all about attracting bright young employees. Taking a square corporate box in the middle of the financial district is against everything they would want to do.”
In contrast to the successes of the tech industries, banks are still afflicted by financial difficulties, slashing staff and selling off prime assets, including their offices, to reposition themselves following the crash.
And those expecting a second dotcom bubble to burst would do well to recognise that lessons have been learnt, according to the chief executive of Derwent London, John Burns, who leases space to tech companies including Cisco and Expedia.
“These are now proper grown-up companies with business plans and good financial discipline,” Burns said.
“If you came out of university with a chemistry degree today would you go to a bank or somewhere you can do better financially and not have to wear a collar and tie?”
Photo courtesy of The Scott Brownrigg Company