- By Charlie Wade
- March 20, 2017
When Google announced in 2013 that it had sealed a deal for 2.3 acres of land at Argent’s King's Cross development, in North London, it was seen as a major coup for the developer. The complex regeneration scheme surrounding the mainline station had taken a long time to deliver and Argent had a big task on its hands turning a once insalubrious location into a fashionable destination for office occupiers.
However, in one fell swoop the Google deal shifted perceptions. If King’s Cross was good enough for a pioneering tech behemoth like Google then it was good enough for other occupiers and particularly those with a tech leaning. And so it has proved in the four years since the search giant signed on the dotted line, with a series of businesses going on to take space in the vicinity.
A similar scenario is currently being played out at the opposite end of London at Battersea Power Station. The redevelopment of this iconic London landmark has been equally as complex as King’s Cross, with numerous proposed schemes falling by the wayside over the last few decades.
However, in 2013 Battersea Power Station Development Company finally got on site and started delivering a major overhaul of the power station and the surrounding land, with a heavy emphasis on residential sales.
Apple signs up for new London campus
By all accounts residential sales have gone well, but easily the most eye-catching deal that Battersea Power Station Development Company has completed to date is the 500,000 sq ft office letting to Apple for its new London campus. The deal, which was announced last September, was sealed after the EU referendum and was seen by many as a vote of confidence in the UK economy. But could the letting have an equally seismic effect to the one Google had at King’s Cross and help to turn Battersea into a new tech hub?
Battersea Power Station Development Company clearly thinks it has the potential to do so. Buoyed by the Apple news it was recently reported that the developer was changing the weighting of the development and now intends to build more commercial and less residential space. This is partly because the heat has come off the top of the residential market in London, whereas office lettings have held up relatively well post-Brexit, so it makes sound business sense to deliver space that there is a proven market demand for.
TMT occupiers start to snap up space
Only time will tell if this strategy pays off because in the last few months some of the more sizeable TMT occupiers in London have secured lettings elsewhere in the capital – Expedia announced recently it was taking additional space at its existing home in Angel, Snapchat is moving to a new 20,000 sq ft office at 77 Shaftesbury Avenue in Soho and Deliveroo has signed up for a 51,500 sq ft at Cannon Bridge House in the City.
At the opposite end of the market size-wise, Battersea might also struggle to attract the tech start-up crowd who until now have flocked towards Shoreditch and the ‘Silicon Roundabout’. While many of these businesses have been priced out of the market due to rapid rent rises in the area, some are still desperately clinging onto the edges of this ‘hip and happening’ part of London, with others slowly migrating into different parts of the City, Midtown and the Southbank.
The other challenge Battersea faces when it comes to enticing tech companies south of the river is the recent aggressive expansion of co-working space providers like WeWork, which are successfully snapping up start-ups that like the community vibe the space provides.
The co-working option
Taking inspiration from these operators, one option Battersea Power Station Development Company could potentially explore is offering its own co-working space. A number of landlords and developers are eyeing up this model at the moment, with the charge being led by the Canary Wharf Group. It opened Level39 – the bespoke accelerator space on the 39th floor of One Canada Square targeted at ‘fintech’ occupiers – in 2013. Since then the space has attracted hordes of operators and the ultimate aim is that these start-ups will take ‘grow on’ space within the Wharf after they’ve reached a certain size.
Indeed the Wharf’s owners have already successfully pivoted the location’s tenant focus over the last few years away from the financial institutions and towards a more mixed occupier community – 55% of tenants at the Wharf today are non-financial versus 20-30% ten years ago. Canary Wharf had a head start on Battersea Power Station Development Company in terms of getting a spade in the ground and as a result it is light years ahead of Battersea, but if the developer wants to capitalise on the Apple coup it could do worse than copy the Wharf’s template for success.