According to the latest research from CBRE Scotland, Edinburgh has surpassed the 1,000,000 sq ft take-up mark for the first time since 2004, with 1,138,500 sq ft of office space transactions across the four quarters of 2017.
The 2017 take-up reported was also higher than the previous 5-year total of 808,833 sq ft, with large pre-lets including the GPU relocation at New Waverley (186,500 sq ft) and State Street Bank (65,628 sq ft) at Quartermile 3 contributing significantly. Further pre-lets include Standard Life Aberdeen taking 69,000 sq ft at 10 George Street and Computershare leasing 41,395 sq ft at Four North.
Angela Lowe, senior director in CBRE’s Advisory and Transaction Services team, commented: “The Edinburgh office market activity witnessed in 2017 demonstrates that occupiers are increasingly considering pre-lets in order to secure space of the required size and quality in their preferred locations. Recent take-up also indicates the continued importance of the financial services and tech sectors in generating demand for quality, city centre offices.”
Despite the strengthening demand in take-up, supply remains at a critically low level, with only one development scheme to complete in 2018: GSS Development’s 2 Semple Street. Completing in July 2018, it will provide 38,648 sq ft of first class Grade A office accommodation in a prime city centre location.
Stewart Taylor, senior director in CBRE’s Advisory and Transaction Services team, added: “The list of reasons as to why there is so little development is getting longer: a lack of sites, limited speculative finance available, the growth of more attractive property asset classes, the loss of buildings to alternative uses, the political landscape in Scotland – the list goes on. This is the new normal. Rents will remain under pressure, particularly for upper floors, resulting in significant change across the property landscape.”
Edinburgh is part of the 2017 Big 4 Club: four cities reporting over 1,000,000 sq ft of take-up. The other members are Manchester, Leeds and Birmingham, breaking the mark for the first time in recorded history. All four regions take-up figures include GPU deals, with the largest UK GPU deal totalling 380,000 sq ft at Wellington Place in Leeds.
