Canary Wharf’s office rents are set to rise by 12.8% in 2016, according to a report from estate agents Knight Frank.
Property experts have said this is down to the Crossrail development, the affordability of rents in the area in comparison to the rest of central London and a general shortage of available office space.
In the last quarter of 2015 Canary Wharf’s rents stood at £39 per sq ft, whereas rents in Shoreditch were £65 per sq ft and in the City they were £70 per sq ft.
Shoreditch has seen a huge increase in rents in the past six years, partly due to Tech City - which started with about 85 technology startup companies in 2010, growing to approximately 200 firms by 2011.
This has meant that within six years rents have increased by 49% - starting at £32.50 per sq ft in 2010.
And they will continue to grow according to Knight Frank, as experts predict a 10% rise throughout 2016.
Further expansion in technology and creative firms will contribute to the shift, as they are growing fast and increasingly seeking larger offices.
The tech sector was the largest source of demand for office space in Central London in 2015, for the fifth consecutive year.
While rents in Shoreditch grew by nearly 24% in 2015 - the City’s rents only rose by 12%.
Knight Frank’s head of City leasing Dan Gaunt said: “The gap between rents in traditional core areas and other sub-markets has never been so small.
“Occupiers are making decisions based on quality of product and amenity, availability of scale, adjacency of workforce and not by postcode.”
Knight Frank’s chief economist James Roberts added: ”What has surprised everyone is that Shoreditch office rents have got so close to those of the City.
“Everyone assumed the tech firms could not afford rents that high. However, the more successful start-ups from five or six years ago have matured into larger, established companies with deeper pockets. They now need bigger, modern, high quality offices, and they can afford to pay to get what they want.
“It’s what happened in Silicon Valley; but there the process took decades, in Shoreditch it has happened in a few years.”