UK agencies feel pinch of high cost of London living

The red-hot London housing market is forcing employees — from interns to execs — to question their future in the capital. Long hours, rising living costs and longer commutes are making the prospects of moving out more appealing. And it’s not just individuals who are feeling the pinch, either. Entire agencies are considering moving operations out of the capital to keep a lid on costs and keep employees happy.

Sarah Golding, chief executive of CHI & Partners, which is headquartered in London, dedicated an entire a column to why agencies might need to skip town in order to remain competitive.

Long hours, she wrote, once came “with the promise that they will progress and earn enough to buy a home, cycle to the office, support a family and have a good standard of living. But that carrot is looking increasingly mouldy. According to an article in The Times, it now takes a salary of £100,000 to afford a family home in or around the capital. How many people in your agency earn that?”

Ogilvy & Mather Group U.K. is feeling the same heat, losing even interns to the rising costs of the capital. The agency has just signed up to the Living Wage initiative — a voluntary scheme, set up by a foundation, which encourages employers to offer a wage more reflective of the cost of living than the statutory minimum wage. It hopes this move will stop the problem of young people from poorer backgrounds being unable to afford to live in London for its internship programs.

The average price of a house in the U.K. is £272,000 ($435,000), compared to £514,000 ($823,000) in capital. London’s cost of living outstrips other cities like Manchester on most other variables too, according to Numbeo.

“This is a huge issue,” said Rob Weatherhead, operations director at Manchester-based agency Tecmark. “Both GroupM and Aegis have started channeling more business through regional offices where costs are more manageable. In both of these cases, there are London-based clients being serviced by the Northern operation. With improved communication technology and transport routes, it’s no longer a requirement for an agency to be in the same city as its client.”

Some agencies outside of London see an opportunity to poach good people. Take McCann Manchester, which has a network of agencies in London and throughout the rest of the country. It claims to have already had people relocate their families from London to come work for them. “Only the other week, I joked that we should take out an ad emphasizing this issue to help our recruitment drive,” said its business development director, Jim Rothnie.

All that said, the London centricity of traditional advertising agencies are unlikely to change overnight. The industry has an average age of 34 in the U.K., so it’s arguable that agencies rely on the young don’t worry about affordable-housing situation as much.

“Humans are funny creatures: They like to move in packs. It’s the reason London has been such a successful magnet for our industry,” said Zaid Al-Zaidy, chief executive of McCann London. “The overheated housing market in the capital is a problem for all industries, not exclusively creatively minded ones. However, unlike many, we creative-types are more adept at working around any problems, including expensive housing, that get in the way.”

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