Silicon Roundabout is losing its shine for technology start-ups according to the latest research, which found the number of start-ups setting up in London’s tech district fell by 70% over the last year.
The number of start ups setting up in the Silicon Roundabout district fell from 10,280 to 3,070 over the last year because of rising rents, UHY Hacker Young said. The Silicon Roundabout area originally gained popularity with internet companies due to its historically low rents but now with soaring rents, the area has lost its competitive advantage, the accountants said.
Since 2014, Silicon Roundabout has seen an 80% fall in the number of new tech businesses from 15,620 to 3,070. The area has now fallen to sixth place of all UK regions in terms of new business creation, having been ranked first two years in a row, the accountancy firm’s research showed.
The area’s popularity has pushed up office rents as demand for space outstrips supply as landlords take advantage of the increased demand to raise rents.
UHY Hacker Young said this has led to many smaller firms looking elsewhere, such as City Road, which lies to the north of Silicon Roundabout. This area saw a 75% rise in the number of new businesses last year, from 8,400 to 14,710, and came top in terms of new business creation.
The Leicester Square area was ranked second and saw a 142% increase in the number of new businesses created. The presence of Google and other big tech names is likely to have attracted programmers and consultants to work in the area.
UHY Hacker Young said the divide between London and the rest of the UK in terms of job creation is marked, with only two areas outside of the capital featuring in the top 10.
Warrington came third with its high ranking likely related to the number of engineering and utilities companies based in the area, such as Arcadis and United Utilities. Large companies in these fields often attracts specialist self-employed contractors.
Colin Jones, partner at UHY Hacker Young, said: “Silicon Roundabout has fallen off the top spot in terms of new business creation, it is a victim of its own success.”
“Silicon Roundabout remains an important hub but London’s tech cluster is now expanding and City Road has become the newest development corridor.”
“When analysing the data it is evident that new business creation is heavily concentrated in London, which reflects broader trends as the capital’s economy continues to power ahead of regional cities.”