Edinburgh, which has one of the strongest growing residential markets in the UK is also experiencing strong demand for office space, the latest analysis shows.
Demand for Grade A office space in Edinburgh was significant in the first quarter of 2018, creating a buoyant commercial property market, according to the report from independent property consultancy Knight Frank.
The latest commercial property figures show approximately 460,000 square feet of new occupier requirements came onto the market in the first three months of the year from companies looking to lease office space in Edinburgh.
The report says that this demand suggests that a recorded decrease in total office take-up compared to the same period in 2017 of 203,000 square feet down to 146,963 square feet, does not reflect the true picture of a more buoyant commercial property market in Edinburgh.
‘While Edinburgh has recorded a lower first quarter take-up than the same time last year, there’s still a positive story to tell of the city’s office market as a whole,’ said Simon Capaldi, office agency partner at Knight Frank.
He pointed out that in the first quarter of 2018 there were significant new occupier requirements, approximately 460,000 square, with a particular appetite for space and office accommodation around the 5,700 square feet mark.
‘The average requirement size has also increased by approximately 1,000 square feet compared to the first quarter of 2017. With city centre Grade A availability currently sitting at 275,000 square feet, there’s a clear shortfall if the city is to meet the current occupier demand,’ he explained.
The report says that technology, media, and telecommunications (TMT) companies continue to play a prominent role within Edinburgh’s office market, accounting for approximately 30% of transactions in the city. There was also demand from financial services and Government in the first quarter of 2018.
‘Looking ahead, we believe we’ll start to see more TMT companies influencing the Edinburgh office market throughout the year, with further collaborative working initiatives potentially arriving to join the likes of Regus Spaces. During the second and third quarters we’ll see a number of deals conclude which are currently underway, and we’d also expect some interesting pre-let announcements to be made,’ he added.
Capaldi also pointed out that there is an encouraging development pipeline in Edinburgh, but most of the space currently under construction is likely to be pre-let in part, or whole, by completion, leaving limited options for occupiers currently searching for suitable Grade A accommodation.
‘Businesses therefore need to think carefully about their next move, and may be forced to consider outside of the core city centre due to a lack of modern, open-plan space and rising costs. We’ve recently observed an increase in companies looking at areas such as the west of Edinburgh, which can potentially provide Grade A offices to meet their requirements, albeit further afield,’ he added.
