Google Shuts London Startup Hub in Home Working Pivot

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The move comes after the pandemic showed Alphabet (NASDAQ:GOOGL) Inc. that it could serve young firms across the country without the need for a physical space, according to a statement Monday. Google was forced to offer its support programs and services online when the coronavirus struck.

“The U.K. startup community doesn’t need access to a single-shared physical space as much as it needs access to resources, mentors, and programs available at scale, anywhere,” Google said in the statement. “And so as the ecosystem develops, so does our approach.”

Google opened the Campus facility near the Old Street gyratory — dubbed ‘Silicon Roundabout’ — in 2012. The area was hailed as Tech City by former prime minister David Cameron and was the epicenter of the country’s fast growing digital economy as low rents and easy access to the financiers in the City of London drew firms.

Since then, the growth of the startup scene in the Shoreditch district has helped drive property rents and values higher than those in traditionally dominant areas like the City, according to data compiled by broker Carter Jonas.

But the increasing move toward flexible and home working among technology companies makes it vulnerable. Rents in the area, where landlords including Derwent London Plc and Helical Plc have developed large office buildings, could fall as much as 12.5% in the year through March 2022, Carter Jonas forecasts.

Big technology companies have been among the most vocal about allowing workers to work more flexibly even after the pandemic ends. Google expects about 60% of its staff to work in the office a few days a week, with about 20% able to apply to work permanently from home.

That’s a stark contrast with finance where executives at banks including Morgan Stanley (NYSE:MS), Goldman Sachs Group Inc (NYSE:GS). and JPMorgan Chase & Co. (NYSE:JPM) have led calls for a return to the office.

(Updates with Shoreditch landlords, work from home policies from fifth paragraph)

©2021 Bloomberg L.P.

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