London’s City fringe submarket is now home to some of the world’s biggest corporate occupiers, but has this changed its value proposition at the other end of the scale?
Is it still a natural home for creative start-ups or growing tech companies in search of offices with personality and rents they can afford?
One man for who the answer is a resounding “yes” is Rob Elman, part of the agency team at City fringe specialist Belcor and the latest EG Radius Dealmaker of the Month.
Elman specialises in the 1,000-4,000 sq ft end of the market, and Radius rankings show that last month he did more office deals than anyone else in the UK, with six completions totalling 12,500 sq ft, suggesting demand is still very much alive.
Cool and quirky
For Elman, the City fringe still has a bohemian edge that has been attracting occupiers since the 1990s.
“We’ve got these super-cool, quirky, warehouse-style offices,” he says.
“They’re not, for example, four-white-walls-and-desks generic office space that you may see in the West End. These have real character. They have got something about them and they’ve got to, to entice people to come to work. That’s what makes our job pretty cool.”
The wider office market has woken up to the idea that offices need to offer more to entice workers back, and Elman believes this is an area where the City fringe enjoys a natural advantage.
“These offices have got to provide amenities and the comfort of being in your own home but having the ability to thrive and do well in the office at the same time,” he says.
“That’s the key drive, as opposed to your generic, boring office that’s not going to stand out and which we see mostly in the West End.”
If it sounds like he is taking aim at the West End, it’s because he is. He says companies have started to migrate east and he expects this to continue.
“We have seen an influx of tech companies move from the West End,” Elman says, pointing to post-production companies facing “mega” rents of £80 per sq ft in Soho.
“We have done quite a few deals in the past 18 months where they’re looking for bigger spaces but it’s just unobtainable. It’s just so expensive in Soho and they’re unable to expand.
“We’ve benefited from that massively. We have gone from fashion and creative individuals who are looking for studios to larger office spaces for established post-production and media companies.”
Getting the deals done
This is not to say everything is plain sailing. Last year, Elman’s colleague Oli Cohen caused a stir with a LinkedIn post bemoaning the time it was taking to get deals over the line. Elman says this is still an issue and he has no doubt where the bottleneck lies – solicitors.
“That’s the number one thing that holds this up,” he says. “It’s either a client or an applicant where a solicitor that they’ve chosen is half asleep. They need a good kick up the backside. Most of these deals, whether it’s a purchase or a lease, if you got both parties’ solicitors to have a call, side by side, it could be done within three, four hours. But these deals drag on for weeks, sometimes months, and they become painful.”
Elman does have a partial solution. He has a solicitor (“bit of legend – gets deals across like there’s no tomorrow”) who he recommends to tenants, particularly when they are new to the process.
“That’s what we want, because it’s good for our clients and it’s good for the tenant. They can start operating and not lose any rent-free period they have managed to obtain,” he says.
Elman points to new developments such as British Land’s mixed-use Norton Folgate as evidence that the City fringe’s future looks bright, combining trademark warehouse architecture with amenities and a focus on ESG.
“Everything is getting more expensive than it already is, and I can’t believe it’s going to be attainable to spend £80, £90, £100 a ft, traditionally, on an office based in the West End,” he says.
“Buildings such as Norton Folgate will drive these tenants out of the West End because the West End, like the City core, is just full of corporates at the moment that are the only ones able to afford these rents. The rents are insane.”
Belcor has also recently diversified beyond its traditional leasehold/freehold markets and launched a flexible office service through a merger with flex broker Workable Offices.
“We have had applicants in the past that have enquired about traditional offices then realised they need something more flexible, so maybe something managed, and we’ve been missing out. We have lost applicants and losing applicants to another firm, ultimately, is losing income,” says Elman. “It’s a part of the market that we’ve now filled.”
EG’s Dealmaker of the Month is selected based on deals submitted to EG Radius through our On-Demand Rankings. Click here to find out how to submit your deals
Photo © Belcor
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