In the 90s it was the urban playground of the Britart crowd and celebrated as the capital’s creative and artistic hub. Now the artists have been priced out and the hipsters have moved on. Is it all over for Shoreditch?
As is always the case, the trendy hotspot started off by being cheap, attracting young and creative types.
Needless to say, once the area became achingly trendy – and the property prices shot up – the City bankers and trust fund babies moved in, driving out the young creatives.
The latest contribution to this gentrification process came from luxury fashion houses Prada, Christian Louboutin, Ralph Lauren and Vivienne Westwood, who are all interested to expand in the groovy district du jour, as reported in Reuters last week.
Luxury retailers are seeking to capitalise on the ‘edgy,’ ‘trendy’ image of the East London district as well as the lower rents.
Upmarket restaurant, Zuma, is also seeking to open a new Shoreditch branch, thought to result in a ‘mini Bond Street’ according to the news agency.
However, with increased high-profile interest, this may lead to a doubling of rents over the next five years, as reported in Reuters.
This puts locals head-to-head with investors who have more resources at their disposal and can pay higher prices for properties.
“It is inevitable,” says Adam Freeman, a postgraduate student and part-time as a sales assistant in Shoreditch.
“We’ve all contributed to this situation in some way or another. We all moan about the higher prices but we continue paying the rent. It’s quite shocking how few people want to acknowledge this is happening. You’ll always find people who are happy to sit in fancy cafes or buy expensive brands and enjoy spending money – it’s a result of capitalism really.”
Rent prices in Bishop Square, south of the High Street, have risen from just £65-70 per square foot in 2005 to £135 this year.
At the same time many of Shoreditch’s existing landlords sit on fat profits after years of property price rises. They too increasingly see their properties as investments.
Industry insiders are comparing the cultural shift as similar to the Meatpacking district in New York, which underwent a similar transformation due to a surge in high-end boutiques and services in the 90’s.
Targeted by the government to create a ‘Silicon Roundabout,’ the area around Shoreditch and Old Street are experiencing a new boom in affluence.
Charles Armstrong, CEO of social analytics company, Trampoline systems reports a similar influx of interest in the east End’s digital heartlands and the government label of ‘Tech City.’
“It’s doing a lot of good – we see a stream of people from corporations, overseas businesses, government.”
What does this surge in investment mean for local residents?
The most pressure will be on low earners who don’t own properties and who fall outside the housing benefits safety net. Many of these will be people who work in local businesses as well as artists.
“The biggest risk for Shoreditch is that the success has led to a rapid rise in property prices,” Trampoline Systems’ Armstrong told silicon.com.
“I don’t think anyone is keen on this ‘mini Bond Street’ idea – at least anyone who’s been living in London for over a year or two. Already most of the people I know have already moved because property prices are so high. People consider living in Dalston, but it’s the same situation there too. Nobody wants to be living in an area like Kensington – it’s sort of an alternative for that,” says Freeman.
“It’s the same thing that happened in areas like Notting Hill and Greenwich. With more and more young professionals and middle class population coming in and a shortage of council homes, the situation has driven poor people out of the borough.”
Last week it was announced that the Government would introduce a Legal Aid and Punishment Bill which further adds to this housing crisis. If voted on later today it would make squatting a criminal offence as well as cutting housing benefits to 25-35 year olds.
Charity organisation, Crisis, is encouraging supporters to write to their MPs to challenge the cut.
Alex Kennedy, Campaigns Manager for Crisis, says, “Vulnerable people are facing a double hit here with the criminalisation of squatting and benefit cuts that we fear will lead to homelessness.”
“I find it sad how the people who made this place ‘trendy’ and ‘alternative’ in the first place are the ones who cant afford it in the end,” says Freeman.
Local resident and proprietor of Salik & Co estate agency, Mohammed Munim expressed a very different sentiment.
“This boom in rental prices is not something that has happened overnight. It has been happening for the past 3-5 years now,” Munim says.
“Rent prices have been steadily increasing over the years and this has to do with more professionals moving into the area who prefer to rent.”
“I think this increase in investment is a good thing. People want to live in an area, which is moving forward. I think this will really improve the standard of the neighbourhood,” says Munim.
Despite the cap already imposed on new housing-benefits claimants, Suzi Robertson, Shoreditch Lettings Manager says, “We have seen a big jump in prices over the last eighteen months.”
“Lettings prices are very much based on supply and demand and good quality stock in such a desirable area is harder to find than it used to be.”
“Some of the reasons behind this are landlords are now selling their properties as well as many tenants renewing their current contracts, making the most of the fact that they managed to secure good properties when there was previously a better choice in the market.”
“The Olympic are also looming so there is a massive focus on properties in east London and Shoreditch is only a stone’s throw away from the stadium so properties in this area are becoming even more highly sought-after. “
“We have also seen a huge influx of overseas applicants so demand is extremely high and several properties have been let at much better prices than we achieved with previous tenancies. “
“Many of our tenants are also seeking longer term contracts to make the most of the fact that they have managed to find properties in such a desirable area and our average tenancy length at the moment is for a 20 month contract.
This ties in well with our clients who value security of tenure, especially at a time when the prices being achieved are so strong.”
With such vast external investment and the likes of Boxpark – “the worlds first and only pop-up mall” – here’s hoping that Shoreditch doesn’t lose its famous edge.