Edinburgh office take-up slips in Q1 but market still ‘buoyant’, says Knight Frank

By James Wallace - Monday, April 09, 2018 14:21

Office take-up in Edinburgh fell markedly in the first quarter – down 203,000 sq ft to 146,963 sq ft, according to Knight Frank analysis - but the data fails to reflect the buoyancy of the market so far this year.

Simon Capaldi, office agency partner at Knight Frank, said: “While Edinburgh has recorded a lower Q1 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. In the first quarter of 2018, there were significant new occupier requirements – approximately 460,000 sq ft, with a particular appetite for space and office accommodation around the 5,700 sq ft mark.

“The average requirement size has also increased by approximately 1,000 sq. ft. compared to the first quarter of 2017. With city centre Grade A availability currently sitting at 275,000 sq. ft., there’s a clear shortfall if the city is to meet the current occupier demand.”

Notable deals in the first quarter of 2018 include:

• Regus’ collaborative working concept, ‘Spaces’, taking around 30,000 sq ft at One Lochrin Square; and

• SWECO, the engineering consultancy, which acquired approximately 15,000 sq ft at Edinburgh’s Quay 2.

Capaldi adds: “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. But with deals including State Street Bank taking 65,626 sq. f.t at Quartermile 3 and the Government Property Unit (GPU) agreeing a 186,500 sq. ft. pre-let at New Waverley, the occupier type swayed back towards 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 Q2 and Q3, 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.

“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.”

James Wallace is a freelance consultant and can be reached via Linkedin or email: jawallace32@gmail.com

 

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