Latest research from global real estate consultancy CBRE shows that the Edinburgh office market remains in a healthy state following Q2 2019, with 176,549 sq ft of take-up – just 9,210 sq ft short of the previous quarter’s figure.
Meanwhile, annual take up at the end of Q2 2019 is up c. 2% on the previous 12 months at 840,640 sq ft, suggesting occupier sentiment remains positive.
However, regears saw a significant increase from 19,335 sq ft in Q1 to 166,035 sq ft in Q2, with engineering giant Aecom renewing its lease on around 17,000 sq ft at the city’s prominent Tanfield development for another 10 years.
Grade A take up throughout the city has also risen significantly from the last quarter to 92,211 sq ft – an increase of 56%. This was mainly due to the 35,608 sq ft taken at South Gyle Business Park’s Broadstone building by Instant Offices and the letting of all seven floors at 80 George Street (c. 44,000 sq ft) to flexible office provider WeWork. Law firm Womble Bond Dickinson finalised its lease on 7,357 sq ft at 2 Semple Street at the end of June, further reducing available Grade A space in the city centre.
At 362,308 sq ft, H1 2019 take-up was down 26% from the same period in 2018, however the 2018 figure (491,885 sq ft), was skewed by the short-term charity letting of 105,000 sq ft at 105 Ferry Road. When removed, take-up figures year on year are almost identical.
Beverley Mortimer, senior surveyor in CBRE’s Advisory & Transaction Services team, said: “With supply levels in Edinburgh continuing to tighten and only two Grade A schemes under construction, we are likely to see continued upward pressure on rents.
“The notable rise in regears for the quarter indicates that occupiers are seeing a real lack of alternative options when it comes to quality office accommodation in Edinburgh’s most desirable locations, and we anticipate this trend continuing throughout 2019. Unless the speculative office development pipeline improves, the city risks losing potential footloose new occupiers to other cities which can offer a greater choice of accommodation.”