The UK’s creative industries face mounting pressure from surging rents and a scarcity of appropriate workspace, a fresh report has revealed.
Rental costs have climbed by a third since 2019 whilst growth within the creative sector has stagnated, forcing enterprises out of urban centres as workspace expenses escalate and profit margins contract.
“If these threats continue to snowball in the way that they have been… [creative industries] will continue to be priced out of London and other parts of the UK,” Laura Flanagan, director at Design District and Greenwich Peninsula, said.
Office space leased to creative tenants has dropped by 23 per cent since 2019, whilst the number of creative enterprises securing new premises has fallen by 27 per cent, the Design District report shows.
“[There’s a] lack of not only purpose-built, suitable space, but flexible and appropriately sized space,” Flanagan added, as reported by City AM.
The creative sectors, encompassing architecture, music, computer games and beyond, form a vital component of the UK economy, generating 2.4m jobs collectively and £124bn annually.
Securing rental offices is becoming “less and less viable”, Flanagan noted, as post-pandemic commercial rents, especially in major urban centres, persist in their upward trajectory.
Prime rental rates in London have increased by 10 per cent over the past year alone, as companies vie for best-in-class space amid a flight to quality in the market. This has been partly driven by evolving energy requirements; stricter energy-efficiency regulations have compelled firms to modernise their premises to meet green compliance standards.
There’s also a scramble to secure tenant-friendly buildings as companies return to higher occupancy rates, alongside a genuine shortage of available space.
The challenge is particularly acute for creative industries, which typically require bespoke facilities, ideally clustered around a creative hub, Flanagan noted.
This is where developments like the Design District play a crucial role, she explained. The facility, situated within the Greenwich Peninsula, accommodates 170 enterprises across 16 individually designed structures.
It functions on a mixed rental framework, whereby larger corporations with greater resources shoulder more of the financial load than emerging start-ups.
“[We want] the Design District to be a blueprint for how you can make [creative offices] commercially viable, how you can bring together the full breadth of the creative industries,” Flanagan said.
With businesses throughout the UK battling to remain viable in their leased premises, younger individuals are increasingly unlikely to find entering the sector attractive, jeopardising the future of industries, Flanagan noted.
“If you can’t continue to nurture [young talent], then the can gets kicked down the road,” she said. The UK government has already unveiled its Creative Industries Sector Plan, which demands action to unleash the potential of creative hubs nationwide through investment in regional development, empowering mayoral strategic authorities and backing creative corridors throughout the UK.
Culture Secretary Lisa Nandy has said data, content and creative services present “new opportunities for growth…. Our long-term fundamentals are strong, and we must retain and capitalise on our long-standing international comparative advantage.”
Whilst Flanagan endorsed the government’s strategy, she argued the optimal solution would emerge from a blend of public and private investment.
“There is a joint responsibility to solve the problem… support needs to be quite broad, and it needs spaces that are right-sized and right-priced all the way up to using those spaces for more than the four walls of an office.
“[You have to] look at the principles of how you support those industries in a more meaningful way… the aspiration [is that] Design District is a blueprint for what true support for the creative industries conduct like and can work in a commercial way.”
