November 28, 2012

A Rented European Office is Now More Likely Harboring a Tech Firm than a Bank


While it was once the case that tech firms were wild eyed start-ups dreaming of hitting it big in an IPO, the early days of the technology sector have ended and those who survived are now in many cases mature firms with proper business plans and an eye toward longevity. It's gotten to the point, according to reports, that when it comes to office rentals in Europe, the tenant is now more likely to be a tech firm than it is a bank.

Based on recent studies by property consultancy CBRE, technology companies throughout Europe including major names like Amazon and Skype as well as lesser-known names like Russia's Mail.Ru e-mail service rented 520,000 square meters of space in the first half of 2012, while by comparison financial and banking firms rented just 420,000 square meters. This puts technology firms into the third slot overall behind only manufacturing and energy companies and commercial services and leisure firms.

By way of a perfect example illustrating the change, Resolution Property recently paid 43 million pounds sterling ($69 million) for an empty block in the century-old Triton Court building in Finsbury Square in London. Triton Court is a massive structure with an art deco design and a huge arched entrance facing the city's financial district, as well as a small back street containing the offices of such familiar names as Google and the creator of Moshi Monsters, Mind Candy.

In a move that shows just how much the tech sector has grown over the banking industry, Resolution Property will be revamping Triton Court at the cost of 150 million pounds ($239.745 million.) to move the entrance to the scruffy side of the building. Reopening in 2014 with the new name, Alphabeta, the new entrance will go through the reception area and will even include an array of amenities like roof terraces, a film studio, and a basketball court.

Basically, according to CBRE, the issue is one of growing use of technology around the world. With global sales of tablet computers expected to jump to 326 million total units in 2015, reportedly representing a jump of three times current sales, it's not hard to see where the tech sector would be facing heavy demand both for devices and for things to do with those devices. The economic downturn actually helped shift the balance as well with tech companies only now gaining and able to more effectively use hoarded cash, while banks and investment firms are downsizing to meet economic conditions.

The maturation of the tech industry is also helping and companies are looking at their futures with much more fiscal discipline than in the past, having learned from past mistakes. Though there's still some room for fun; Mind Candy, for example, put down Astroturf instead of carpet and put in a slide connecting two floors.

The tech industry is getting another go, it would seem, and the space is looking like its much better equipped to take that chance than it was when the tech industry began in earnest back in the late nineties. With technology picking up in other industries, we may be looking at a larger paradigm shift afoot with its own potential risks and rewards. Only time will tell if the tech sector can keep up its gains, but considering the recent progress it's made betting on the tech sector to succeed should prove a fairly safe bet indeed.




Edited by Jamie Epstein



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