Towering ambition: how tech could rejuvenate Croydon’s office market

By - Wednesday 19th November, 2014

The technology sector is starting to rival finance as the industry powering London’s growth. But how much of that can we expect to filter down to Croydon?

Renaissance building, Croydon.
Photo by Liz Sheppard-Jones, used with permission.

As the cranes begin to cast shadows over East Croydon station, and shimmering glass and steel rises to replace the dirt that has lain adjacent to the tracks for many years, one may expect Croydon’s office market to be in rude health. After all, the much publicised Renaissance building on Dingwall Road successfully let all 100,000 sq ft of office space in a short period of time – a great achievement for a speculative development in an area where leasing activity had not only cooled in recent years, but had been damaged by the loss of major international businesses such as Nestlé, Philips and BT.

However, whilst plans are pressing ahead for the new office development at Ruskin Square, a Grade A office space adjacent to central Croydon’s other train station lies empty. 180,000 sq ft of the Interchange Croydon development by West Croydon station remains unlet, a year after the optimism surrounding the building being brought to the market. With rental prices very affordable by London standards at £22.50 per sq ft (and indeed cheaper than those offered by the Renaissance building at £23.50 per sq ft), two main factors spring to mind as to why the building remains unlet.

Croydon, with its vacant, affordable office space and great connections is perfectly placed

The location is clearly less advantageous than that offered by Renaissance, with East Croydon offering faster connections to central London and Gatwick Airport, and the wider east Croydon area seen as more desirable for residents and workers alike than west Croydon. However, more worrying is levels of demand; affordable, Grade A office space is readily available next to a Tube network-connected station and is completely unlet.

We have two contrasting stories therefore; the considerable success of Renaissance and the optimism of Ruskin Square negated by the challenges faced at Interchange. Vacancy rates remain high in Croydon and rents remain low – which, depending on which side of the fence you sit, could be a positive or negative story. If you’re one of the many entrepreneurs behind a technology company in London however, the news could be very positive indeed.

The technology industry has joined the banking, finance and professional services industry in powering the economy of London. Indeed, according to JLL the TMT (Technology, Media and Telecommunications) sector accounted for 30% of all occupier activity in central London in Q3 2014, compared to 20% for the banking, finance and professional services industry. Outside of central London, Croydon has also been a part of this drive. Jonny Rose, co-founder of the Croydon Tech City movement, suggests, “The Croydon tech scene is booming at the moment having seen a 38% increase in new tech, digital and creative businesses set up in the area since 2011.” This much needed development across London (if and when the financial markets hit the bottom of their next cycle, London needs another sector which can help soak up the damage) has been fired by several headline deals in recent years, including a 210,000 sq ft letting by Amazon in Holborn, and Google’s headline-grabbing (and delay-ridden) 750,000 sq ft campus in King’s Cross.

The town needs to offer all kinds of office space – whether it be that offered by charities for minimal cost, a shabby 60s office block, or Grade A facilities

Whilst we shouldn’t expect deals of this size to happen in Croydon anytime soon, investors and developers in the town can take advantage of the filter down effect of these deals. As the ‘Midtown’ area of central London (that bit between the West End and the City in layman’s terms) and the ‘City Fringe’ (Shoreditch, Old Street, or ‘Tech City’ and the like) continue to attract major international technology companies, and as London becomes the forefront of the tech sector outside of the USA, prices will grow exponentially. Croydon, with its vacant, affordable office space and great connections is perfectly placed to take advantage of the spillover from those medium sized companies who are being priced out.

Whilst this potential development could be hugely exciting for those behind the Croydon Tech City movement, more immediate is the range of advantages being brought to current tech business owners. As Rose explains, “There are now over a thousand such businesses in the borough: this has been created by a combination of the supportive and dynamic start-up ecosystem created by Croydon Tech City and Croydon’s unique mix of competitively-priced office space, new business rate relief scheme and a solid broadband infrastructure.” Whilst start-ups are likely to begin from workspaces such as the fantastic opportunity presented by 3Space, for those ready to move into their own premises the vast amount of empty space and considerably cheaper rents present an incredible opportunity which, if central London does become unaffordable, will not be there for long.

Rents for some office spaces in central Croydon are close to single figures, which puts the town at a distinct advantage compared to central London. Compare these rents to those in the City fringe, where they average around £32.50 to £42.50 per sq ft for Grade A space, and £22.50 to £30.00 per sq ft for refurbished Grade B space (Carter Jonas). Most tech companies are not looking for Grade A office space, but instead an area that they can adapt and fit out to their own needs.

It is clear that these buildings do not offer a Grade A space. However, for those companies in development which need little more than a quiet space, internet access and a toilet, Croydon boasts an ideal platform for expansion. Rose continues, “For tech entrepreneurs who are not yet in a position to commit to fixed or serviced offices, there has also been an interesting growth in workspaces in the borough (such as 3Space and My Outspace) which have emerged to capture the market between bedroom start-up and multi-floor tenancy.”

Croydon needs to attract and retain businesses in much the same way that it needs to attract and retain talent

So how can Croydon create an environment where the demand from small to medium sized tech companies is sustained? Firstly, the recent abandonment of permitted development rights by Croydon Council – i.e. preventing unlimited office to residential conversion – is a greatly positive step for the future of Croydon. The town needs to offer all kinds of office space – whether it be that offered by charities for minimal cost, a shabby 60s office block, or Grade A facilities – if it wants to keep those start-ups which do become a local success. Imagine: a start-up operating out of 3Space, growing into its own space in another floor in Southern House, before becoming successful and large enough to rent a premium Grade A space at Ruskin Square.

However, Croydon also needs to expand its offering outside of the office space itself. There needs to be enough housing, enough modern shops and enough of a cultural offering to attract businesses and the people who work for them to the town. The myriad of cranes which will arrive in the town over the next few years covers the first two bases but, for a town of over 350,000 people, the cultural offering in Croydon is still very weak, despite the positive steps taken by initiatives such as the opening of the RISE Gallery. Croydon needs to attract and retain businesses in much the same way that it needs to attract and retain talent, and it is not yet in a position to do so.

Croydon also needs the local authority to assist. Croydon Council needs to maintain a good relationship with developers and investors to develop the town as the primary office market outside of central London, and there is plenty that can be done to achieve that – including marketing, tax breaks and incentivising landlords to offer flexible rents to tenants. With Croydon Tech City over two years old, the movement now has a fantastic opportunity to mature and take advantage of the window of opportunity which is starting to crack open.

Further reading (PDF): CBRE, Creative London: How technological innovation, work and play are changing office workplace strategies of creative industries (2014)

If you would like further research on the commercial or residential markets in Croydon, please do not hesitate to contact me at 

Tom Lickley

Tom Lickley

Contributing a variety of roles to the Citizen since early 2013, Tom now focuses upon regeneration, urbanism and real estate writing. He is a strategic communications consultant specialising in the real estate sector, and counts a number of the world's largest investment and fund management companies amongst his clients.

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  • Andrew Kennedy

    What is the demand like for artisan, small workshop, manufacturing, industrial space? I know at least two people looking for low cost single entrepreneur workshop space. Croydon and it’s various industrial sites, Purley Way, Gloucester Road and many back street workshops used to be thriving. eg: Maclaren racing cars were once made in the Trojan workshops on Purley Way, alongside three wheelers! There’s more to life than making apps in an office you know. Let’s get some more industry and some apprentiships going.

    • Stephen Giles

      Where are all these new “tech” businesses going to find enough business to stay in business, or does it just look good that they have “started up” ??