According to the Mayor's office, one in eight Londoners - more than 550,000 people - work in a creative job or in a creative industry. That is more than any sector except finance. In Shoreditch - which was until 1996 an unloved shard of industrial buildings fringing the north of the City - it seems that this ratio is inverted.

At the time when London's financial community was grabbing dockland or scraping the sky, London's black-clad entrepreneurs were colonising and re-branding this neglected area, turning sooty warehouses into galleries, internet cafés, boutiques and hang-outs such as Cargo, the bar and music venue with walls stencilled by graffiti artist Banksy. The nearby Rochelle School became a warren of studios for artists, photographers and fashion designers, including Giles Deacon and Luella Bartley. The nightlife within the scalene triangle that connects Old Street tube station, Hoxton Square and Brick Lane, has become one of London's most vibrant. If the 2012 Olympics, which will be held two miles away, were to hand out medals for DJing and graphic designing, Team GB would collapse under the weight.

But while overripe for satire, Shoreditch is still ripe for investment. In May, in the narrow cut-through that hides Cargo, the doors opened to Rivington Place - the first new-build public gallery to open since the Hayward in 1968. Next month, neighbouring Redchurch Street will get a new Conran hotel and restaurant complex, The Boundary. In August, in the middle of the slum where Arthur Morrison's 1896 novel A Child of the Jago was set, a new A Child of the Jago materialised. This one though is a "concept shop", owned by Joe Corre, son of Vivienne Westwood and Malcolm McLaren and co-founder of the Agent Provocateur lingerie brand. The adjacent building, already a blizzard of sawdust, will probably be offering asymetrical haircuts by Christmas.

Epitomising the area's transformation is Tea Building, five storeys of sandblasted studio space with bar, café and gallery straddling the corner of Shoreditch High Street and Bethnal Green Road, where Shoreditch nuzzles the City. Tenants include Film London, multimedia company Poke and the ad agency Mother. Michael Raibin, a director of Richard Susskind & Co, one of the area's leading lettings agents, says Shoreditch could benefit further from the economic meltdown: "Rents for A-grade commercial property are still less than half those of central London. That's £35 per square foot, compared with £80. There's going to be a lot of downsizing or companies heading east. It's getting a lot more attractive"

It's also getting a lot more glamorous. In June 2007, the top three floors of Tea Building became Shoreditch House, a private members' club with wild seabass on the menu, Keira Knightley on the guestlist and a 16-metre heated swimming pool on the roof. As well as providing a spectacular platform to marvel at the expanding city's skeletal skyline, the rooftop offers an astronaut's view of the crater which will become Shoreditch High Street station in 2010 as part of the extended East London rail line.

Also visible is the Bishopsgate Goods Yard, north of Spitalfields Market, an appropriately gothic-scale symbol of the occasional friction between London's creative hub and the bordering financial district. What was the UK's first railway building, for years used mainly as a vehicle park and flea market, is identified within the London Plan as a "city fringe opportunity area". Various plans have been mooched over for a mix of uses that include accommodation, shops, studio space, cafés, leisure facilities and swimming pool.

Unusually, though, for development angst, local sensitivities chime with the economic climate. In August, Hackney Council told Foster & Partners to radically rework its £500m Bishops Place 51-storey tower - one of six such projects opposed by heritage groups - so it would spare the popular Light Bar. It is unknown whether Foster will return to the drawing board ahead of a conservation report in October but plans for 750,000m2 of offices, including several skyscrapers, are likely to be shelved as the City slashes its demand for space.

As Rowan Moore, architecture critic of London's Evening Standard, says: "With the credit crunch it is unlikely that anything will be built soon, which means there is time to get things right.