Brokerage firms say tech firms are helping fuel increased office space demand in smaller European capitals as well as cities like Edinburgh and Kraków
Shefali Anand / Wall Street Journal : Tweets: @burghdiaspora and @nnovick Tweets: James M. Russell / @burghdiaspora : Convergence, not divergence: “New Tech Centers Sprout in Europe...Lisbon, Kraków, Poland, & Edinburgh are among the cities that have become popular for the industry” http://www.wsj.com/... Natalie Novick / @nnovick : “Toon Vanparys, chief executive of Sentiance, said they chose Vilnius because the city has a large pool of engineers & data scientists locally, plus they can attract senior engineers living elsewhere who want to move away from.. large tech cities” https://www.wsj.com/...
Context & Ripple Effects
This 2018 report captures the moment Europe's tech map started to decentralize: brokerage firms flag rising office take-up not in London or Berlin but in Edinburgh, Kraków, Lisbon, and Vilnius. The pull is talent-led — Sentiance chose Vilnius for its local pool of engineers and data scientists and its ability to attract senior engineers fleeing larger tech cities, a dynamic that echoes the US pattern where Brookings later found 36 non-coastal cities outpacing traditional hubs in tech job growth.
The demand wave arrived alongside money: CB Insights counted $93.3B invested in European tech in 2021, up 142% year over year, giving second-tier cities the funded startups that need desks. Kraków had already built the base as Poland's business-services and BPO hub, and Lisbon layered crypto and quality-of-life appeal on top of its unicorn-factory pipeline.
First-order effects
- Landlords and brokerage firms in Edinburgh, Kraków, Lisbon, and Vilnius gain a new tenant class of funded tech companies, shifting office demand away from the primary capitals those brokerages traditionally served.
- Firms like Sentiance can staff senior engineering roles outside London-scale markets, trading big-city proximity for local talent depth and lower cost bases.
Second-order effects
- Kraków's business-services growth has already pushed salaries to some of the highest levels in Poland, so incoming tech tenants bid against BPO employers for the same workers, accelerating local wage inflation.
- Primary-capital landlords face marginal tenant loss at exactly the moment remote-work-era hiring models — like the UK approach of keeping only executives local to HQs — reduce how much space a growing company needs in any one city.
Third-order effects
- If the pattern holds, Europe's startup ecosystem matures as a network of specialized second-tier hubs rather than a single dominant capital — a structural answer to the continent's thin showing among the world's top tech companies, where only four of the top 50 are European.
- The same diffusion is visible on both sides of the Atlantic — Stockholm startups now weigh relocating to scale, just as US tech jobs spread beyond coastal hubs — pointing toward office markets priced around talent pools rather than legacy financial centers.
The trend: Tech employment and office demand are diffusing from Europe's primary capitals into smaller specialized hubs, with venture funding volume setting the pace of the spread.