Rental prices are affected by many factors. For example, it’s well known that homes located near popular schools often have higher rents. But it turns out that the presence of global tech giants also has an impact on rental prices in an area.
That’s the finding from new research, which looks at several boroughs in London and finds that there is a clear pattern of rents being pushed up by the presence of large tech firms.
Higher Average Rental Costs
The research by Howsy studied the cost of renting in the areas close to big tech companies. It looked at the locations of the tech giants in London, including global companies like Amazon, Google and Facebook, and researched the average rents and increases in rents since the companies opened their offices.
It found that the boroughs where tech giants are present have an average rental cost that is 44% higher than the average for London.
And since the companies moved into the boroughs, rent has increased by 4.7%. In London as a whole, the rent has only gone up by 1.7% on average.
Boroughs Affected by Tech Giants
There are several boroughs across London that have been affected by the arrival of big tech firms over recent years.
For example, Westminster is home to both Facebook and Microsoft. Here, the average rent is £2,838, which is a huge 64% more than the average in London. Rents have also increased by 4.5% since the arrival of Facebook in 2018, compared to 2.9% across the whole of London in the same period.
Camden is another borough that has been affected. It is home to Google’s offices after the search giant moved here in 2016. Since then, rents in Camden have gone up by 9.2%. And since Amazon moved to Hackney in 2017, the average rent has increased by 4.5%.
Higher Rents Closer to Offices
The research also found that the most expensive rents within the boroughs as a whole are found in the areas directly surrounding the offices.
For example, in Hackney, the average rent surrounding the Amazon office is £3,413. This is 86% higher than the rest of the borough.
And in Camden, the average rent is £3,200 surrounding Google’s offices, compared to £2,427 in the whole of Camden.
Pros and Cons of Presence of Tech Giants
In many ways, the presence of the tech giants in London is a positive thing. It shows that they are committing to the capital, helping to create jobs and investing in the area. However, it is clear that the downside – for tenants at least – comes in the form of higher rental prices as more people are attracted to the boroughs.