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Knight Frank launches new research on start-up costs for techies worldwide

22 September 2016

Traditional office space:

·         Of the 27 cities analysed including nine from Asia-Pacific, London tops the rankings as the city where tech start-ups face the highest real estate costs. This is followed by New York and San Francisco.

·         Hong Kong, Beijing and Singapore are the only Asian cities in the top 10 chart. For a tech start-up setting up in these Asian cities, the rental costs would be over 40% less than London.

Co-working space:

·         For tech start-ups opting for the co-working spaces based on a four-desk collaborative open plan environment, Brisbane offers the best cost savings, offering an astounding 79.4% discounts versus traditional office space.

·         The top six cities offering substantial cost savings in a co-working environment after Brisbane are all from Asia-Pacific: Beijing (74.1%), Bengaluru (72.0%), Kuala Lumpur (70%), Bangkok (66.2%), and Sydney (64.5%).

·         For Bangkok, tech start-ups face the lowest real estate costs globally, whether looking at traditional space or co-working space.

Nicholas Holt, Head of Research, Asia Pacific, Knight Frank Asia Pacific, says, “With technology and creative industries moving to the heart of office markets globally, it is perhaps unsurprising that the top three tech districts in our rankings represent the cities with the largest technology clusters. London, New York and San Francisco have all benefitted over the last decade from the huge growth in these sectors, as the brightest and the best entrepreneurs look to cluster into districts where they can benefit from the cross-pollination of ideas and mutually beneficial synergies.

“In Asia, it is the Chinese cities of Beijing and Shanghai that are seeing some of the most innovation and creativity in the technology sector, with companies like Tencent and Alibaba taking significant amounts of office space in the major Tier-1 markets. 

"In all of the Global Cities, co-working spaces, in their various guises, continue to be an attractive option for tech start-ups – offering the flexibility, support and infrastructure for nascent companies. The cost savings offered by such a work environment can also be very compelling, with co-working spaces in the Asia-Pacific region offering some of the most significant cost differentials when compared to traditional office space.

“Whether internationally renowned co-working operators such as WeWork – which has now opened in this region – or more local incubators or co-sharing spaces, there is an increasing amount of options for tech and creative start-ups. The possibility of working shoulder-to-shoulder with other likeminded start-ups has proved to be a significant draw that appeals to these types of industries.

"With the rate of technological change increasing and adoption rates moving at a faster pace, technology and creative industries will be at the forefront of much office demand over the coming years.”

 Cost for a tech start-up in setting up an office 

Rank

City

District or submarket*

Own office cost p.a. **

(US$)

Co-working provider p.a. *** (US$)

Cost saving for co-working p.a.

1

London

Shoreditch

$66,706

$28,933

56.6%

2

New York

Brooklyn

$62,736

$28,800

54.1%

3

San Francisco

Mid-Market

$61,680

$24,000

61.1%

4

Paris

1st, 2nd and 9th Districts

$57,426

$21,276

63.0%

5

Boston

Seaport District

$50,700

$25,920

48.9%

6

Dublin

Docklands

$47,345

$34,577

27.0%

7

Los Angeles

Playa Vista

$47,124

$27,600

41.4%

8

Hong Kong

Cyberport, Pokfulam

$40,488

$40,635

-0.4%

9

Beijing

Zhongguancun

$39,090

$10,111

74.1%

10

Singapore

One North

$39,088

$23,105

40.9%

11

Washington DC

NoMa (North of Massachusetts Avenue)

$39,038

$14,400

63.1%

12

Sydney

Ultimo

$38,607

$13,707

64.5%

13

Brisbane

Fortitude Valley

$38,091

$7,833

79.4%

14

Miami

Coconut Grove

$37,125

$27,600

25.7%

15

Austin

The Domain

$35,280

$26,400

25.2%

16

Toronto

King & Spadina

$35,268

$20,832

40.9%

17

Seattle

South Lake Union

$33,600

$24,000

28.6%

18

Melbourne

Docklands

$33,383

$12,461

62.7%

19

Amsterdam

City Centre | Metropool

$31,546

$12,501

60.4%

20

Chicago

Fulton Market District

$28,650

$25,200

12.0%

21

Seoul

CBD

$25,638

$19,333

24.6%

22

Bengaluru

Whitefield

$25,359

$7,100

72.0%

23

Mexico City

Reforma-Condesa

$24,948

$12,000

48.1%

24

Kuala Lumpur

Bangsar South

$23,414

$7,024

70.0%

25

Bogota

Salitre

$22,065

$16,320

26.0%

26

Shanghai

Zhangjiang Hi-Tech Park

$19,640

$10,834

44.8%

27

Madrid

Julian Camarillo area

$18,202

$7,978

56.2%

28

Bangkok

Thonglor / Ekamai

$18,132

$6,120

66.2%

* The leading tech district or submarket in each city

** Traditional office lease cost includes annual rent of 600 sq ft of office space in addition to start-up costs (fit-out and agency)

*** Co-working cost based on four desks in collaborative open plan environment

Source: Knight Frank Research

To download the report, please click: www.knightfrank.com/globalcities

 

For further information, please contact:

Nicholas Holt, Head of Research for Asia Pacific
nicholas.holt@asia.knightfrank.com +65 6429 3595 @nholtKF

Rachel Loke, Head of Asia Pacific Public Relations & Communications
rachel.loke@asia.knightfrank.com +65 6429 3587 @knightfrank

Pamela Phua, Marketing & Communications Head, Knight Frank Malaysia
pamela.phua@my.knightfrank.com  +603 2289 9669 @KnightFrank_my

Tim Saw, Director, Marketing and Communications, InvestKL Malaysia
tim.saw@investkl.gov.my  +603 2260 2270