Edinburgh’s office occupier market got off to a slow start in the first three months of 2018 with a significant drop in the total amount of space transacted, despite an increase in requirements and viewings, according to property consultancy JLL.
140,000 sq ft of office space was transacted in the year’s first three months over 36 separate deals, a 30 per cent drop compared with the same period in 2017 when 200,000 sq ft changed hands. In 2017, Edinburgh’s total space leased by occupiers was well over 1 million sq ft, dwarfing the most recent quarter in the capital.
Despite a slow start to 2018, JLL’s data shows that the number of requirements and viewings has actually increased over the quarter, suggesting a lag effect which should see a greater number of deals falling later in the year. The number of deals recorded in Q1 was the same as recorded in Q4 2017, showing evidence of consistent demand, but without any larger deals landing yet in 2018.
Demand across Edinburgh’s market remains extremely high particularly for corporate and tech occupiers, evidenced by a 40 per cent jump in viewings in Q1 2018 compared to Q4 2017. JLL also recorded a total of 133 requirements across the city in Q1.
The largest deal of the quarter was Instant Offices taking 23,558 sq ft at Cornerstone, South Gyle, with the second largest deal being Swedish engineering consultancy, Sweco, who took 14,092 sq ft at Quay 2 in Fountainbridge – both of which JLL were involved with.
Supply has continued to reduce with no new stock hitting the market in recent months. Supply across the city remains critical, with only one new development due for completion in 2018 – 2 Semple Street, which will deliver 38,648 sq ft.
Craig Watson, Director at JLL, said: “After such a high level of take-up in 2017, the office transactional figures for Q1 will seem disappointing, however demand remains extremely strong with a marked increase in the number of occupiers seeking space in Edinburgh when comparing the first three months of 2018 with 2017’s final quarter. Our experience proves there is always a lag effect in property, so knowing a number of occupiers have large active requirements for the city we remain confident of further pre-letting activity later this year. We also remain confident that the rest of the year will outperform Q1, particularly as we continue to see new inward investment considering Edinburgh.”
