Technology, media and telecom (TMT) companies are looking beyond their traditional home in London's West End to more affordable parts of the capital, including Farringdon and Southbank, research by Jones Lang LaSalle showed.
The property consultancy said prime West End rents, at 95 pounds a square foot, had encouraged TMT companies Skype, LinkedIn, Google, Saatchi & Saatchi and Ogilvy & Mather to mull moves to other, more affordable, areas of the city.
As a result of the migration of TMT sector companies ... areas around the north and east fringe City (of London) locations such as Farringdon, Old Street and Spitalfields are seeing good levels of demand, said Dan Burn, JLL's head of City Agency.
Those areas, plus the Midtown area between the City and West End, were continuing to experience rental growth driven by competition for the best space, Burn said in a statement on Thursday.
Year-to-date take up in the West End totaled about 2.8 million sq ft, against 3.7 million sq ft in the same period of 2010, said JLL, noting overall supply remained tight.
The vacancy rate for Grade-A West End floor space was 2.4 percent, well below the long-term average of 3.1 percent, while the overall vacancy rate was 4.5 percent, against a long-term average of 5.9 percent, JLL said.
In London's City financial district, year to date take up was about 3.1 million sq ft, against 6.1 million in 2010. Prime rents in the city remained stable at 55 pounds a sq ft.
(Reporting by Andrew Macdonald, Editing by Mark Potter)