London - The silicon valley of Europe?

IT, telecoms and internet start-up companies have doubled their up-take of London’s office space from 640,000 square feet in 2010 to 1.3 million in 2011.

The rapid rise of tech companies contrasts the fortunes of the wider London office market, which fell by 27 per cent in 2011. This ability to go against the trend emphasizes the growing importance of the technology industry in the UK economy.

During the past decade London's technology industry has been focused in Old Street, an area that’s become known as the Silicon Roundabout. However, new data shows the huge increase in space up-take has coincided with a migration by technology companies to other parts of London.

In the past year, Google has taken up 155,000 sq ft in Covent Garden. Groupon, the online deal website, has also moved into a 43,000 sq ft office in the city.

Technology and internet companies can expand quickly in comparison to other industries. In the last 15 months, online startup Stylistpick has grown from one employee to a staff of 45 and last Wednesday it announced it had raised £10M to expand further.

It can be tough to marry this kind of growth with a flexible leasing agreement.

Felix Leuschner, Chief Executive of Stylistpick, said, ‘The most challenging thing for a start-up is that there is high uncertainty for the future. If things don’t go so well, we might not be around and if they do, we’ll need a much bigger space.’

Ireland and Berlin, where property is much cheaper, offer tough competition to London as a Tech City. However, if Government continues to provide incentives, such as a reduction in red tape, London may yet become Europe’s silicon valley.

Are you a tech start up?
Where in the world would you like to locate?
Do you have problems with inflexible leases?