Office space in Edinburgh remains in high demand with vacancy levels dropping to a new low of 4.5 per cent, according to new research by JLL.
Just over 200,000 sq ft was transacted between January and March this year, slightly down on occupier activity within the same period last year (283,000 sq ft). However, according to JLL’s latest market data, take-up levels during Q2 are poised to increase with at least 350,000 sq ft, across seven deals, currently under offer.
The biggest deal of the quarter involved Cirrus Logic, who took an additional 22,000 sq ft at Quartermile 2, taking the chip designer’s total occupation within the building to 115,000 sq ft.
In Q3 of 2009, Edinburgh’s office vacancy level reached 7.8 per cent. In recent years the rate has continued to drop, indicating the city’s growing health across business sectors.
A third of all space let in the first three months of 2017 went to businesses working in telecommunications, media and technology (TMT). Last month Edinburgh’s largest available self-contained office building, 64,000 sq ft One Lochrin Square was opened following refurbishment to specifically target TMT firms looking to secure modern office space in excess of 30,000 sq ft.
Around 70% of deals during Q1 were for office space in the city centre, and around 80% were for requirements of 5,500 sq ft or less. JLL was involved in 48 per cent of transacted space by sq ft.
With demand for city centre space only likely to further constrain supply, JLL predicts that decreasing vacancy levels within Edinburgh’s city centre will fuel further pre-letting activity throughout the year.
Craig Watson, Director at JLL commented “Supply remains critically tight across the city. Taking into account the weight of office space currently under offer, and with no new Grade A office space likely to become available until at least the end of this year, supply is going to further diminish as the year progresses.
“Due to the lack of options available to occupiers, pricing will continue to remain competitive and many firms may consider looking at pre-let options to secure high quality space when it does come available.
“Edinburgh continues to attract a broad occupier mix, with tech accounting for around a third of all deals this quarter, showing the strength that the city holds in terms of attracting and retaining young, growing businesses.”