If you are a traditional office developer, still aiming at the same old business and professional occupiers who have served you well in the past, perhaps it’s time to look away now.
The new kids on the block are the technology, social media and telecoms sector, who now take up more new office space than any other category and are already totally taking over the market in Edinburgh – where university departments such as Informatics are churning out the skill set in demand.
Rockstar (moving into the 75,000 sq ft former Scotsman offices at Holyrood), Fanduel (pre-letting the 59,000 sq ft top three floors of a building still under construction at Quartermile), and Skyscanner (who have already taken 50,000 sq ft in Edinburgh and 30,000 in Glasgow) – these are the guys who have completed the big deals over the last 12 months.
Watch out for announcements soon of major lettings to Cirrus Logic and Amazon.
The capital can also boast what is claimed to be the biggest technology incubator in Europe at Codebase (which plans to expand from the ‘mothership’, actually an ugly 1970s concrete block redundant for any other purpose, to three other Scottish cities), a new digital skills academy, and a Deloitte Fast 50 company, accountancy software company Free Agent Central, which has taken over 11,500 sq ft of the former Todds Murray space at Fountainbridge.
One property person who certainly understands this new world is Neil Gordon, a partner in Eric Young & Co, who has advised Rockstar, Fanduel, Skyscanner, and Craneware. “There are other agents active in this field, but it is quite nice that we act for the two Scottish ‘unicorns’ (start-up companies valued at more than $1bn),” he says modestly, given he has pulled off some remarkable feats.
These include creatively structuring complicated off-market deals such as Rockstar’s move to Holyrood, when the newspaper’s offices were not even on the market but he spotted an opportunity given the dwindling circulation and surplus of space for current needs.
“At one time, high tech companies would work in a cupboard and their staff were not too bothered,” said Gordon. It is only a couple of years ago that Scottish Enterprise piloted recycled ship containers in Dundee to cater for notoriously nocturnal games developers.
“Now property has arrived for them, partly because they have matured into successful businesses and partly because their offices are a key part of attracting and retaining staff with the right skills. The quality of space the tech companies are taking is at the top end of the market.
“There is also a shift in people wanting to live and work in city centres again, repeated across the UK, and people in this sector have a bit of a social conscience, care about the environment, energy efficient buildings, recycling, things like that.”
Do tech companies want anything different from an office than anyone else? “On the whole the fit out is more creative and the big difference is that although they may occupy the same amount of space as professional services firms, the way they use it is different.
“A lot more space is given over to common spaces, break areas, recreation (it is commonplace to have table tennis or pool tables) and, perhaps surprisingly, they are meeting room hungry.”
It does vary with the background. Rockstar, owned by an American publishing house, has a sophisticated fit-out, fantasy sports specialist Fanduel goes for fun, and travel experts Skyscanner incorporate day beds as well as airline style seating in their Skype room.
The 200,000 sq ft Tanfield in Canonmills, recently sold for £56m, is 80 per cent full and is popular with tech companies, including Dell, Zonal Retail, Craneware, FNZ, and Avaloq. It provides good amenities like The Botanics on its doorstep and a cost advantage.
New owners Rockspring are to refresh its appeal and shake off the last bit of oak panelling from the days when Standard Life had the building.
The situation in London appears to mirror this pattern. Ian Mulcahey, MD of world leading architectural practice Gensler, told an Edinburgh property conference a Tech Hub incubator, set up in a BT building in Old Street derelict for a decade, was filled by start-ups within the first month.
An even higher profile success is Level 39 in Canary Wharf, bringing together young financial technology companies with senior IT executives from a dozen of the world’s leading banks.
The area, devastated by the international meltdown of 2008, has reinvented itself as a technology accelerator for finance, retail, cyber security and future cities technology with 170 start-ups devising the apps we now use in our daily life.
Dot com companies like Amazon and Google are taking the space once the domain of the finance sector. We are said to be on the cusp of a third industrial revolution, with technology changing the way we shop, make cars, the way we live.
Paradoxically, while technology allows people to disperse and work from a beach or a croft in the Highlands, the signs are they are actually rushing back to cluster, collaborate, explore, and engage in this new era. “We no longer sign up to work for a firm, Reggie Perrin style, for the rest of our lives,” said Mulcahey. “We are mobile workers, we have our workplace in our bag, and go and meet people in collaborative spaces. Technological change affects everything and is accelerating and you will see it spread in Edinburgh, Glasgow and elsewhere.”
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