The founding partner of Monmouth Dean, Jason Hanley, once recounted to me how certain areas of the market considered the TMT industry to be “too much time”. That is to say the requirements of the casually dressed characters running dotcoms were not as easy to deal with as those of their old school friends in banks and hedge funds.
How times have changed. There is a wave of firms operating across the London office market that have geared up to cater to the needs of the TMT industry. Examples include Monmouth Dean, which can consider itself an expert on media companies in Soho and Noho; Hatton Real Estate, which had 35% of its 2012 leasehold transactions to companies in the TMT sector; or the more established in the guise of Cushman & Wakefield, which now has a media and tech sector in its armoury.
In 2012, the TMT industry accounted for 20% of take-up in London – the sector was joint top alongside the insurance industry. In an office market that is far from buoyant, the current crop of London office agents can ill afford to consider TMTs “too much time” any longer.
According to EGi data, since 2010, TMT has accounted for 6.7m sq ft of take-up in central London and has had quarterly peaks of 27% and 29% of the total take-up in Q2 2011 and Q2 2012, while overall for the period it accounted for 19%.
The question that remains is how long can this be sustained? There are two parts to this question. First, will the demand keep coming? Second, does London have the stock to support the demand if it does continue?
At present, there is no shortage of TMT demand in London with requirements out, at the larger end of the scale, from the likes of Ogilvy and Mather, Omnicom, Havas, Amazon (initially for 80,000 sq ft , but up to 750,000 sq ft in time), Vodafone, Pearson, Sony and Yahoo; and at the smaller end from rapidly expanding start-ups such as Huddle.
With respect to whether or not London can sustain the demand, the evolution of these companies should be considered. Start-ups in this sector typically grow fast, remain footloose and have changing requirements as they evolve.
A tech start-up may require the stereotypical high-ceilinged, quirky office with a slide and close proximity to other such firms; but years down the line, shareholders’ desire for economies and the need for more desks will take precedence – this is something that London can satisfy more easily.
The list of companies highlighted above and the differing requirements of these companies at different stages of their lifecycles highlights the problem with the broad definition of TMT itself, but that is a story worthy of more column inches than this column has.
