Potentially stifling its ability to create the next Google or Twitter, according to a new report, New York and San Francisco have been trumped by London which has been named as the most expensive city in the world for technology start-ups to open offices.

The issues and aspects of leasing and fitting-out 600 square foot of office space in tech and creative districts in the world’s leading cities was looked upn and investigated by estate agent Knight Frank who made the report and declared Lindin to be the costliest.

$66,706 per year would have to be shelled out by start-ups who are looking at London’s Shoreditch area which is considered to be a hotbed of tech start-ups. With costs $62,736 on average, in the second place in terms of the costliest startup office set up is Brooklyn in New York. Mid-Market in San Francisco was adjudged the third most costly neighborhood for start-ups where start-ups would be set back by $61,680 a year.

In fourth and fifth place are the  first, second and ninth arrondissements – or districts – in Paris ($57,426) and the Seaport District in Boston ($50,700) respectively.

With lower start-up cost offers at $47,345 and $35,280, a relatively cheaper alternative for start-ups can be the emerging tech and digital districts such as “Silicon Docks” in Dublin and The Domain in Austin respectively, Knight Franks’ analysis showed.

However the emerging and lucrative concept and trend of Co-working spaces can be some form of solace and serve as some hope for start-ups looking to set up shop in London, New York or San Francisco. In such buildings companies are allowed to rent small offices or even desks and these buildings are run by companies like WeWork for example.

The cost of occupying four desks in a co-working space is $28,933 per annum in London’s Shoreditch area. Now compared to renting traditional office space this arrangement gives a $37,773 difference, says Knight Frank. The annual saving using this strategy would be $37,680 in San Francisco’s Mid-Market district.

“As we head towards Brexit, tech start-ups are the sort of firms the UK will be looking to for future growth. So it is disappointing to discover London is such an expensive place for them to rent business space, at least if they want their own offices,” James Roberts, chief economist at Knight Frank, said in an emailed statement.

“Collaborative offices are consequently playing a vital role in offering affordable business space, but for start-ups to move to stage two as companies, they will ultimately need their own offices. London needs to be more affordable for tech firms if it wants a home-grown Google or Twitter.

(Adapted from CNBC)

Categories: Economy & Finance, Entrepreneurship, Sustainability