Soaring rental costs are playing a significant role in putting off new businesses moving to the area.
Silicon Roundabout, frequently dubbed the UK’s answer to Silicon Valley, is suffering significantly from a fall of new businesses as rent prices prove a deterrent.
Just six years after Silicon Roundabout was launched and new business openings in the area have fallen by 70% over the last year.
In 2013 and 2014 the area was the UK’s fastest growing area for new business, but in 2016 the number of new openings fell to 3,070 from 10,280 in 2015, according to a Freedom of Information Act request from accountancy firm UHY Hacker Young.
Colin Jones, partner at the accountancy firm, told the Daily Mail: ‘Silicon Roundabout has fallen off the top spot in terms of new business creation, it is a victim of its own success.
“The Silicon Roundabout area gained popularity with internet companies originally due to its historically low rents. Now that rents have soared, the area has lost its competitive advantage.”
The area had been earmarked as the Tech City, an area for entrepreneurs and large technology companies to set up base and turn the district of East London into a hub of technology.
However, companies such as Google and Facebook have opted to set up their London headquarters in other areas of the city, Kings Cross and Fitzrovia respectively.
Now to add to that list could be thousands of other new business technology start-ups.
William Newton, EMEA Director, WiredScore, said: “While the number of new start-ups launching in London’s Silicon Roundabout may be slowing, this certainly isn’t reflective of the capital as a whole, with recent data from London & Partners indicating that it attracted significantly more tech investment than any other major European city last year.
“It’s also clear that the start-up ecosystem in London has dramatically changed since David Cameron launched Tech City six years ago. There’s been a boom in innovation in the capital and a number of new hubs springing up which provide start-ups with the same community that Tech City first offered; from the Level 39 incubator for fintech in Canary Wharf and West London’s ‘TV triangle’, to the numerous co-working spaces providing this community on a much smaller scale.
“Tech City was a key contributor to the birth of the capital’s tech start-up community, but should no longer be viewed as the centre of the London tech scene.”