Research by leading commercial property consultancy CBRE Scotland has revealed a strong second quarter for Edinburgh’s office market after a slow start to the year. Figures show Q2 take-up of 351,916 sq ft – a 150% increase in take-up from Q1 2018, with half yearly take-up amounting to just under half a million sq ft (491,885 sq ft).
The most notable deal of Q2 2018 was asset management firm Baillie Gifford taking over 60,000 sq ft at the newly developed Mint Building in St Andrew Square, with other large lettings including 43,801 sq ft at 11-12 Lochside Place to Diageo and 14,832 sq ft at Atria One to EDP Renewables. The largest deal of the quarter was Edinburgh Palette occupying 109,153 sq ft of space at 525 Ferry Road, albeit on a short-term lease.
Allan Matthews, a director in the Advisory & Transaction Services team at CBRE, said: “While some recognition has to be made that the largest deal of the period is on a flexible, short term arrangement, there are other notable transactions which continue to demonstrate the strength of the Edinburgh office market, not only in the core city centre but in established, out of town locations as well.
“Other significant deals included The Scottish Public Services Ombudsman (SPSO) taking 16,568 sq ft of out of town space at Bridgeside House, a Smart development at MacDonald Road, while the trend for pre-lets continued with Baillie Gifford securing Grade A development the Mint Building – currently undergoing extensive regeneration – in its entirety, taking over 60,000 sq ft of space.”
Total Edinburgh supply remains at a critically low level at 923,540 sq ft, with this figure dropping even further to 225,231 sq ft for city centre Grade A space. This represents a 30% decrease on the available space from the same period in 2017, which stood at 1.33m sq ft at the end of Q2. City centre Grade A availability now sits at 1.15% of total stock.
2 Semple Street, due ready for occupation at the end of July 2018, will be the next development to complete in Edinburgh city centre, providing 38,648 sq ft of Grade A office accommodation across six floors.
Allan continued: “There continues to be a number of larger, unsatisfied requirements for Edinburgh city centre. While M&G has completed the purchase of The Haymarket, and it is anticipated that speculative development will commence on site as quickly as practical, even with this new round of development planned the city will continue to face a severe shortage of high quality Grade A accommodation in the immediate short term.”
Angela Lowe, a senior director in the Advisory & Transaction Services team at CBRE, added: “During this quarter, we have seen significant interest in all developments which landlords have chosen to speculatively develop. We hope that this will encourage more developers to progress office opportunities, whether that be new build or high quality refurbishments. The trend of pre-letting is now well established in the city.”
