Not all TMT occupiers are expanding – Jones Lang LaSalle
The TMT sector, encompassing broadcasting, publishing, new media, advertising, marketing, PR, information technology, telecoms and media occupiers, continued to take a rising proportion of Central London office space last year, accounting for 22% of the total taken up by the end of 2012 compared with 20% in 2011, notes Jones Lang LaSalle.
Although the sector has thus overtaken the traditional banking/finance sector, Jones Lang LaSalle says it is uncertain whether this can be sustained. “For every Google or start-up there is a technology mammoth that is challenged and potentially downsizing,” it cautions. “What might be more telling over the long term is the continuing interplay and blur of technology and media firms, the associated changing space needs and also ongoing pressure to consolidate currently fragmented portfolios, particularly in the media sector, over the long term.”
Most (49%) of the existing demand from TMT occupiers comes from companies that are seeking expansion space, JLL says: there are 12 companies with expansion requirements, nine of which are ISPs and general internet-based services or software houses & data processing, and three of which are telecoms requirements. Companies with forthcoming lease expiries are also generating steady demand.
TMT occupiers are sensitive to the quality of space, which needs to offer the potential to aid creativity, and also sensitive to cost – there are only a few major companies such as Apple or Google that can pay top prices, the firm notes, whereas most are not cash-rich and would rather spend in core investment areas rather than on real estate.
Despite a lack of good-quality supply and rising rents, Soho, Noho and Covent Garden remain the preferred submarkets for advertising and media companies, JLL says, but activity has been increasing in areas such as King’s Cross, Shoreditch, Farringdon, Old Street and Clerkenwell. These areas are increasingly attracting larger occupiers, drawn by the possibility of synergies with the smaller start-ups that have already located there.
