IN THE City seriously modern office blocks contain workers who deal in billions of pounds daily without actually darkening their palms with dosh. But the EC2 part of the City, the section that Christopher Wren missed, is another story. The buildings are grim and grey, traffic is non-stop, the air is heavy with particles, and trees are a distant memory. Old Street roundabout looks as if it took 10 hard punches for every one it threw. Only its mother could possibly love Commercial Street.

Welcome to Shoreditch. Welcome to Hoxton. And say hello again to spillover, the latest Hot Spot Hot Word. Clerkenwell rejects settle for Shoreditch, which has been warming up for some time now, and its northerly neighbour Hoxton.

The area is getting spillover from another direction as well: "Central Islington rents have dramatically increased, and people are being pushed toward Shoreditch and Hoxton," says Susan Horrex, the director of Halesmere, a lettings agency. She notes that many of her clients "want to live as close to Old Street as possible, but there is not much residential property except for Shoreditch and Hoxton".

Scarcity didn't deter one group of men who were strongly attracted to the area. They commissioned the loft pioneers Manhattan Lofts to convert a warehouse for their own residential use. The building is actually large enough to contain 50 units. Now nearing completion, 46 of these have already been sold.

The building's name, the Factory, pays homage to Andy Warhol's New York loft, and Manhattan Lofts supremo Harry Handelsman believes that "the triangle, which is the land between Clerkenwell, Islington and Shoreditch, is becoming London's TriBeCa, the newest creative district in Manhattan." (In the Big Apple, TriBeCa designates the Triangle Below Canal Street.)

"The Ditcherati", as they are called, are the new colonisers of the area, according to James Goff, the managing director of Stirling Ackroyd. "We get inquiries from the bohemian set, City people, as well as an odd sprinkling of couples whose children have left the nest. The market is strong in live/work units, and this area is popular with graphic designers, artists, architects and photographers." The area already has plenty of bars and restaurants, and supermarkets are appearing to meet growing demand.

Overall, Shoreditch is more salubrious than Hoxton and any spillover within this area goes from the former to the latter. But Daniel Derbyshire, of Felictiy J Lord estate agents, notes that "Hoxton Square is quite expensive, so some people who live in Shoreditch say they live in Hoxton".

The Low-Down

Prices: Typical of loft prices in the area generally, the Factory's price range is pounds 125-pounds 350,000, the latter for penthouses with enormously high, arched ceilings. Otherwise small flats are available for under pounds 75,000, especially if they are ex-council or need work.

Properties: St George is awaiting planning permission to construct a 48-unit (12 of which are reserved for social housing) new-build in Hoxton Square. Stirling Ackroyd will soon start marketing a 28-unit Columbia Estates new-build on Curtain Road which should be completed by the summer. Mr Goff says that Copthorn Homes is also looking to develop Pittfield Street.

Rentals: Halesmere's Ms Horrex notes that: "rental demand is still high despite recent turmoil in the banking sector. Those upheavals affect sales more than rentals."

Transport: Zone 1 is cheap as well as convenient for all central-London travel. Docklands and City Airport are nearby, and Liverpool Street Station provides a fast rail link through to Stansted Airport.

Shoreditch and Hoxton in history:

Hoxton is mentioned in the Domesday Book, Ben Jonson successfully fought a duel in Hoxton Square, and Margaret Roberts became Margaret Thatcher in Wesley's Chapel on City Road. Hoxton Hall Theatre is the only original music hall still being used as a performance venue.

Council tax: Hackney's Band A is pounds 526, and Band H is pounds 1,579.

Estate agents: Halesmere Lettings (0171-226 2956); Felictiy J Lord (0171- 251 9449); Stirling Ackroyd (0171-729 7763).