California has served as a rich reservoir of talent for the technology industry since the 1980s thanks, in large, to the remarkable growth of Silicon Valley.

The sprawling technology cluster surrounding the San Francisco Bay is home to some of the world’s most formidable tech firms, including Apple, Intel and Meta, the parent company of Facebook. It has also incubated products that have become woven into the fabric of modern society, such as the iPhone.

It is no surprise others want to emulate its success of the business district. In fact, the UK's chancellor of the exchequer Jeremy Hunt said as much in January when he outlined the regime's ambition to transform the UK into “the next Silicon Valley”.

During a speech at Bloomberg’s London headquarters, prepared by ChatGPT’s AI software, Hunt appealed to tech entrepreneurs, life science innovators and green tech companies to make the UK their next destination, hinting at financial incentives for those willing to accept his offer.

“If anyone is thinking of starting or investing in an innovation or technology-centred business, I want them to do it here. I want the world’s tech entrepreneurs … to come to the UK because it offers the best possible place to make their visions happen,” Hunt said.

His speech came as major tech firms, just weeks before, had signalled their intentions to reduce office space across the UK and Ireland in a bid to cut costs. Google's parent company, Alphabet was reported to be looking to leave its offices at Nuveen's Belgrave House in Victoria, London, where it occupies 111,505 square feet. Meanwhile, Meta is reportedly looking to sublet offices in Fitzrovia barely a year after signing a lease for 310,000 square feet.

The outlook has not improved with businesses and investors alike spooked by the banking turmoil involving the collapse of the US’s Silicon Valley Bank, a major investor in proptech and technology. Credit Suisse was forced to accept an emergency takeover by fellow Swiss bank UBS in March. Deutsche Bank, a well-known commercial real estate lender, has also seen its shares plunge.

Despite a volatile market, big tech is expected to remain buoyant in the UK, something the government is betting on. While Knight Frank’s 2023 UK Cities report acknowledged tech firms are reducing their global headcounts, it found the broader technology sector “continues to evolve”, with life sciences and tech businesses indicating growth of 52% over the next three years.

Should the UK government realise its ambitions to become the “next Silicon Valley”, one zone that could play a starring role is London and the Thames Valley, where a strong contingent of tech giants are already based.

Microsoft has 130,677 square feet across the third, fourth, fifth, seventh and eighth floors at GIC Real Estate’s 2 Kingdom Street in Paddington, with its lease expiring in November 2027. Reports suggest it has shelved plans for a large 500,000-square-foot requirement, being handled by Cushman & Wakefield, in the capital for now.

In Soho, Twitter occupies 79,731 square feet at 20 Air Street, signing a 10-year term at the Norges and Crown Estate asset in 2020. Earlier this year, the Crown Estate filed a suit against the social media site for unpaid rent. Amazon also opened a huge 630,000-square-foot office at Principal Place, Shoreditch, six years ago. The 1 Principal Place address is owned by Colliers Global Investors.

Partner in Knight Frank’s national offices team Roddy Abram said the arrival of Crossrail, London’s flagship transport project which opened last May connecting the west and east of the city, could enhance the area’s appeal to big tech.

“Those markets, West London, Heathrow, Slough, Maidenhead and Reading are the biggest markets in the South East, they are the best-connected markets in the South East and they are the markets that have the biggest access to the talent pool.

“In my mind, they are the likely markets that would capitalise on [the government’s] target as they can host substantial development and are significantly supported by a large occupier pool in the tech and tech media sectors. They are also the markets where we are seeing the biggest rental growth."

Abram says a “continued challenge” to the market is escalating build costs, with the prices of raw materials, such as wood and steel, rising sharply after Russia’s invasion of Ukraine. Although prices have come down since peaking last summer, he warns rents will need to “go hand in hand”. He adds “grown-up businesses” like tech firms should be able to stomach those costs.

Areas hugging London, like Croydon and Watford, he adds, could also attract big tech due to their robust transport links. Reading is another destination he says could appeal. The location already houses global telecoms firm Cisco, which has 102,702 square feet at 300 Longwater Avenue. US financial services and credit card group Visa is also looking for an 80,000-square-foot requirement in the area.

Abram highlights two development schemes that would fit the bill for tech entrepreneurs considering a UK move, the first of which is Maidenhead’s Tempo regeneration scheme. The L&G project will provide around 150,000 square feet of offices in the fourth quarter of this year.

Reading’s £750 million Station Hill development, above the town's train station, will also add 275,000 square feet of offices across two buildings. That scheme is being developed by Lincoln MGT, a joint venture between Lincoln Property Company and MGT Investment Management.

“Both of those developments are the next generation of Thames Valley buildings and very much aligned with occupier demand at the moment, for example ESG-focused and a raft of added building amenity and services, big floor plates. Both are high quality buildings with generous amenity areas, breakout areas and all the facilities that go with them."

"There will also be an expectation for rents in the high £40s (per square foot) and arguably going upwards, towards the £50s,” he adds.

While London and the Thames Valley may represent some of the UK’s most established locations for global tech, developments in other areas of the country are popping up all the time and raising a new standard for office amenity and specification.

One such development is MK Gateway in Milton Keynes, a mixed-use scheme combining workspace, living accommodation and retail. It is being developed by Socius, the mixed-use developer that spun out of developer First Base in 2021. The scheme, backed by pan-European investor Patron Capital, will provide 185,000 square feet of offices and will respond to occupier demand post-COVID, it says.

Perhaps the biggest attraction of the £180 million development will not be its space but access to 5G connectivity, making it a testbed for businesses wanting to try out emerging technologies that run off the network. Socius director Olaide Oboh says MK Gateway is an ideal destination for big tech and tech start-ups.

“One of the biggest things the government needs to deliver on its Silicon Valley 2.0 promise is infrastructure which is something we’re not very good at in this country; we’re not very good at forward thinking in terms of implementing that infrastructure earlier.

“What Milton Keynes council alongside their commercial partners has done here is to introduce 5G to the city. That is a game changer for Milton Keynes, making it a great location for people in tech and a place where people want to come to operate in a 5G environment. Having 5G infrastructure across Milton Keynes and having it publicly available means that it can do things that other places can’t.”

She says the city’s connectivity has already attracted a good amount of tech business to the area, such as Xero, Amazon, HP, IBM, Microsoft, Cisco and Apple. Oboh says 5G connectivity also allows companies to “fail faster”, which can't be offered everywhere.

“The growth in businesses from AI to gaming is just exponential and, for us, we think infrastructure has been a gamechanger in the city. In terms of the real estate, Milton Keynes is a new city – it was only built 55 years ago, so it has a real commercial heart and lots of buildings now which are currently being repurposed, predominantly, to house this growing tech talent, who want to work in a collaborative, engaging environment”.

Oboh adds tech entrepreneurs eyeing Milton Keynes will have access to a large talent pool that will be equipped to fulfil the “jobs of the future”. She says the developer plans to have “predominantly tech businesses” at Gateway, whichcould be joined by government departments looking to collaborate with those groups.

She says: “What [the government] should not try to do is to cut and paste what is happening in Silicon Valley because we have a completely different set of dynamics here. I think we have to create what is relevant to the UK, which will always have to start with the right infrastructure.

“Whether it is about the physical space, or the tech infrastructure, they have got to be the ones leading that to enable private commercial groups to come on board and use that as the jump-off point to grow their businesses or to locate themselves in these places.”

Having top-class office amenities may be an obvious requirement for UK cities looking to attract big tech. But markets also must have access to a healthy talent pool to allow prospective tenants to recruit well.

Dimitrios Vlachopoulos, head of portfolio and location strategy EMEA at Cushman & Wakefield, says findings from its 2022 Tech Cities report, which assesses how location compete for business across key talent and real estate, demonstrates the importance of a rich talent pool.

London takes bronze position globally for the depth of its tech talent pool, according to the study, finishing above New York and the San Francisco Bay Area and Paris. It is trumped only by Tokyo and Beijing only. Vlachopoulos says other UK cities like Manchester, Birmingham and Leeds are also developing at pace.

He adds regional cities have benefited from changes to working patterns born from the pandemic. “Talent in the past would go where there are job opportunities. This is changing a little bit because with remote working talent can choose first where to live, and then where to work which means that locations that provide access to good quality of living, low cost of living, access to good universities and connectivity.

“That means that locations such as Leeds, Bristol and Bath are gaining ground on other areas from that perspective. So, we need to think how the markets are at home and how they are competing with the other markets.”

According to the report, Manchester has a talent pool of around 43,968 employees and is one of Europe’s fastest growing digital tech hubs. It is home to around 21% of the UK tech and digital roles outside London. Firms like Deliveroo, which occupies around 11,000 square feet at Bruntwood’s 5 New York Street, are already in the city, while cloud-based accounting firm Xero agreed a deal to take 13,200 square feet at the Landmark building on St Peter's Square at the end of last year.

Vlachopoulos says the government’s ambitions to turn the UK into the next Silicon Valley could be linked to its flagship Levelling Up agenda. The scheme aims to spread funding and jobs across the country by backing local development projects, including town centre regeneration and transport infrastructure projects.

“From the investor point of view, they expect less support from the more mature markets. I think [the Silicon Valley ambition] could be tied up very well with the Levelling Up strategy in the UK, where you can actually start helping some of these regions by bringing international investors into some of these markets.

"I think there would be a lot of synergies there, particularly around cost-talent ratio. It could also help investors to be less concerned around competition in big markets, such as London,” he adds.

Pointing out the UK’s size in comparison to the Silicon Valley area, Robert Irving Burns chief executive Antony Antoniou says the country will be limited from creating anything that could rival a single tech hub such as the US's. But he argues there is no reason why the UK can’t harbour several, smaller Silicon Valleys, adding this is already happening.

Antoniou uses London’s Knowledge Quarter in King's Cross, which nearby houses Google and its approved one million square foot UK headquarters, as an example of an area which can collectively replicate what has been achieved at Silicon Valley. Firms will also be attracted to the space due to Grade A accommodation, excellent local amenities and transport links into mainland Europe.

During his Bloomberg speech, Jeremy Hunt promised financial incentives for big tech operating in the UK and started work on this in the Budget by extending the British Patient Capital programme, which provides funding to UK businesses with high growth potential. The government has pledged to bring forward an "ambitious package of measures" by the autumn.

Ahead of this, Antoniou outlines measures he thinks would help to create an “attractive fiscal environment” to encourage big tech and investors to enter the UK market. “I would like to see lower interest rates as this will stop businesses from paying down debt and instead invest in growth. The chancellor has limited control over that, but it would be helpful for the Treasury to look at specific tax breaks, to support start-ups, green tech or life sciences.

“We need to encourage these businesses to reinvest their profits into new start-ups and future growth. These tax breaks could also be linked to specified investment zones across the UK, aiding the Levelling Up agenda.”

He adds: “I agree that we are standing at the cusp of a new age of technological revolution and that the UK has a seriously credible chance in attracting and retaining those forward-thinking enterprises, but we are competing in a global market, so we need to play to our strengths and target our own Government investment for maximum returns.”

Updated on 12 April 2023 to reflect Socius and First Base are separate companies.