Research by leading commercial property consultancy CBRE Scotland has revealed that office market activity in Edinburgh in the third quarter of 2018 has remained similar to the second quarter and is up 28% on the same quarter in 2017.
Figures show take-up for Q3 2018 was approximately 272,000 sq ft, a decrease in take-up from Q2 2018 although the letting of 525 Ferry Road to Edinburgh Palette in Q2 accounted for the majority of the difference in figures. City-wide Grade A take-up was 126,407 sq ft – over half of the total Grade A take-up for the year-to-date, which is sitting at just over 252,000 sq ft. This does however fall somewhat short of the total Grade A take-up for 2017 at 525,529 sq ft, although the lack of available Grade A space is undoubtedly an influencing factor.
CBRE was involved in 96,125 sq ft of Edinburgh office transactions (35%) including the pre-letting of over 55% of Capital Square on Morrison Street to legal firms Pinsent Masons and Brodies LLP.
Other notable deals include the letting of two new offices for Psigma Investment Management Limited at the Capital Building on St Andrew Square (3,615 sq ft) and 40 Torphichen Street (3,684 sq ft), and the remaining suites at 1 Lochrin Square to existing occupier Spaces and CTRIP (18,887 sq ft).
Total Edinburgh supply remains at a critically low level, with just 1,294,413 sq ft available at the end of Q3, a slight increase (10%) on the available space from the same period in 2017, which stood at 1.17 million sq ft across all quality types, city-wide, although this is primarily due to the addition of second-hand, out of town accommodation. This availability figure drops even further to 326,000 sq ft for city centre Grade A space.
Beverley Mortimer, from the Advisory & Transaction Services team at CBRE, commented on the figures: “The pre-lets at Capital Square have formed a large part of the total take-up for the quarter; this is indicative of the tightening supply in the Edinburgh market as the building will not complete until May 2020. It shows that tenants with requirements are now, in some instances, having to search for office space up to 18 months in advance of lease events to ensure they secure high quality space. In general the professional services sector take-up in 2018 has been significantly higher than that of 2017 which has in the past couple of years taken a back seat to the creative and technology sectors.”