London companies relocate from West to East: C&W

Over 50% of companies in London moved part or all of their operations to a submarket in 2013, according to new research published by Cushman & Wakefield.

'Rising rents and lack of suitable office space are key factors forcing occupiers to become increasingly footloose in their choice of office location with more than half of all occupiers having moved part or all of their operations out of their existing submarket so far this year,' the agent said in the report, which analyses Central London leasing transactions and relocation patterns during 2013.

Excluding new companies, 52% of all occupiers moved some or all of their operation out of their existing submarket with Soho and Covent Garden seeing the largest number of companies move out. A recent example is Facebook, which will be relocating from its office in Seven Dials to 10 Brock Street in Euston, while Hill & Knowlton, for example, based at 20 Soho Square, has opted for the Buckley Building in Clerkenwell.

The submarkets that saw fewest companies leave include King’s Cross, Euston & Marylebone, Southbank and Victoria. In fact, Victoria occupiers show the greatest loyalty of any submarket, with 88% of all Victoria leasing transactions from companies already located in the submarket, followed by Hammersmith and Mayfair and St James’s.

Emerging fringe locations such as King’s Cross and Euston & Marylebone in the West End and Southbank, Clerkenwell and Shoreditch in the City have seen the highest proportions of in-movers: with more than half of all leasing activity involving companies previously located in other submarkets.

The steady migration of companies from West to East is very much in evidence and gaining momentum, as rising rents and low vacancy rates force occupiers to consider alternative locations. Around 15% of leasing transactions in the City submarkets originated from submarkets in the West End and West London during 2013 to date, while just 1% of West End transactions have come from City occupiers.

At submarket level, taking into account the number of companies which moved out and those that moved into an area, the City Core had the greatest net positive balance (12), followed by Southbank (7). The submarkets that saw a greater outflow of companies than those moving in were Soho and Covent Garden (-7), Mayfair and St James’s (-4) and the Eastern City Fringe (-4).

The media and tech sector showed the greatest willingness to move locations by number and were second-highest by proportion. Just over 70% of companies in this sector relocated from their existing submarket: of these companies over half relocated from the traditional media hubs of Soho, Covent Garden and Noho.