Three of the biggest city centre deals in the UK helped deliver a record-breaking quarter in commercial property take-up in Edinburgh.
Figures from leading real estate advisory business GVA reveal the capital saw a staggering 175% increase in take-up over the five year quarterly average, with a total of 432,350 sq. ft. This was driven by the Government Property Unit’s agreement to let 189,000 sq. ft. at New Waverley and investment manager State Street’s decision to pre-let 65,600 sq. ft. at Quartermile 3.
Peter Fraser, Director of Business Space for GVA in Edinburgh, said: “Edinburgh has had an exceptional quarter and has massively outperformed all other regions in the UK in terms of sq. ft. take-up. Pleasingly there has also been inward investment transactions among the large deals, with Australian financial services firm taking 41,000 sq. ft. of space at the newly refurbished Edinburgh House, North St. Andrew Street.
“The activity hasn’t just been restricted to the city centre, with an 82% increase on the five-year average in out-of-town deals too. This represents an increase from 63,962 sq. ft. to 116,265 sq. ft. and the biggest out-of-town deal saw Standard Life take 31,355 sq. ft. at South Gyle Broadway.
“However, this record-take up has also compounded the fact that demand is outstripping supply. No new stock is coming through to replace let or pre-let space and there is now a significant shortage in Edinburgh and future development is also constrained.
“On that note, the outcome of the merger between Standard Life and Aberdeen Asset Management will be crucial for the office market. Combined, they occupy just under 1m sq. ft. of space in the capital and theoretically they could downsize when they merge, which would bring much needed additional space to a market starved of new supply.”
In comparison to Edinburgh, activity in Glasgow was subdued with take-up in the city centre at 132,060 sq. ft. Out-of-town performance was up 52% on the five-year quarterly average, from 90,400 sq. ft. to 137,040 sq. ft. Police Scotland let 27,760 sq. ft. at Inchinnan Road, Paisley in the quarter’s third largest out-of-town deal in the UK.
Alison Taylor, Senior Director of Business Space for GVA in Glasgow, said: “There’s been a steady churn of activity across all requirement sizes throughout the quarter with total take-up bolstered by a 40,800 sq. ft. deal to The Student Loans Company.
“All eyes are on Q3 in Glasgow, with two 80,000 sq. ft. deals at Atlantic Quay under offer; The Scottish Courts Tribunal Service and The Department for Work and Pensions. We anticipate that demand will outstrip supply in Glasgow before the end of the year with the availability of regular floor plated accommodation reducing.
“The time is ripe for new construction and we hope to see speculative funding and development before the undersupply really starts to bite.”
Total take-up for the first half of 2017 in Edinburgh amounted to 626,575 sq. ft. with Glasgow on 235,280 sq. ft.