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Increasing rental prices could mean the end of London's Silicon Roundabout

3 min read

23 April 2015

The future of London’s iconic "Silicon Roundabout" is at risk with two-thirds of SME owners poised to abandon the capital because of soaring property prices.

The University of Sussex’s business incubation network, Sussex Innovation, said 63 per cent of small business owners in London and the South East have considered leaving the capital over the next five years.

This number rises to 78 per cent for technology startups, which has “called into question the sustainability” of East London’s Silicon Roundabout, “home to both UK and global entrepreneurs”.

The survey found that the key factors pushing entrepreneurs out of London are rising property prices, with 78.5 per cent of owners citing this as a major problem.

According to Sussex Innovation, average rental prices in areas such as Shoreditch and Clerkenwell were up five per cent in 2014 to £52.50 per sq ft and are predicted to rise by another nine per cent in 2015.

Other SME concerns included difficulties accessing funding and investment, and securing top talent.

The majority, 64.3 per cent, of those thinking about leaving the capital said they would consider relocating to the South East as an alternative.

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Mike Herd, executive director of Sussex Innovation, said: “With office rental costs soaring in London, it’s no surprise that entrepreneurs are looking to move out of the capital.”

The research came as Sussex Innovation unveiled its first off-campus incubator hub in Croydon. It promises to provide a base for up to 30 high-growth potential companies with over 300 employees and aims to support over 100 local businesses through its network.

Over the next three years it expects its first tenants to generate £6m in turnover and raise £1m in investment.

“We’ve seen local businesses moving away from areas like Croydon due to a lack of flexible facilities designed to support businesses during rapid growth,” Herd added.

“Incubator hubs such as Sussex Innovation are being established to tackle both of these issues head on and to help the next generation of entrepreneurs. We know that growing businesses favour good transport links and competitive property rates over the perceived cachet that a London address provides, but still need access to markets and expert advice, making Croydon the next likely epicentre for entrepreneurs.”