It’s tech, not finance, that’s now shaping Europe’s big cities

Google has a major presence in London’s redeveloped King’s Cross area.
Google has a major presence in London’s redeveloped King’s Cross area.
Image: mattkieffer on Flickr/CC-BY-2.0
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The tech industry seem to be at the core of every glittering urban overhaul in Europe’s historic cities. There’s Google’s lavish new digs in London’s redeveloped King’s Cross area; Apple’s imminent occupancy of the iconic Battersea Power Station; and Facebook’s commitment to a vast new complex in Paris made of a converted train station.

Tech companies now lease more office space annually in Europe’s cities than banks and financial firms, according to data from the property consultancy CBRE Research. And the effect is reshaping these iconic urban centers: London has its Silicon Roundabout; Scotland its Silicon Glen, and Berlin its Silicon Allee.

Tech firms have been leasing more new office space than banks since 2011, in the wake of the financial crisis, but the gap will widen in the coming years, as tech companies are expected to hire workers at a faster rate than other sectors engaged in office-based work, according to consultancy Oxford Economics.

Tech firms tend to cluster around particular neighborhoods that are just beyond traditional central business districts (CBD), CBRE Research found. The evidence is in rocketing rental rates in these tech clusters. While rents in City of London, the city’s financial district, grew by 6.3% on average between 2006 and 2015, rent in Clerkenwell and Spitalfields, where the city’s so-called Silicon Roundabout is located, shot up by as much as 17.5%. It’s even more pronounced in Berlin, where CBD rent grew 8.7% over that period, but rent in tech-centric zones spiked by 43.2%.

Those tech clusters also happen to be gentrified hubs for hipsters. It seems the new masters of the universe prefer their software and hardware with easy access via urban cycling and a flat white.