Edinburgh office market posts strong Q2

Edinburgh office market posts strong Q2

Edinburgh’s commercial property market saw a positive second quarter in 2016, despite subdued market sentiment, according to analysis from Knight Frank.

Professional services and technology, media and telecomms (TMT) companies continued to dominate the market, accounting for about a third of take-up in April – June 2016. In total, 180,000 sq. ft. of space was let in the city centre, following a high number of lease renewals.

There were also a high number of transactions for large offices in Edinburgh. Among these deals was Chris Stewart Group’s purchase of Blenheim House, which is expected to bring around 34,000 sq. ft. of new Grade A space to Edinburgh city centre by late 2017 or early 2018.

Toby Withall, office agency partner at Knight Frank in Edinburgh, said that deals continued to brew in the capital, and appear to be unaffected by Brexit.

He said: “The outlook for Edinburgh remains positive, despite the uncertainty hanging over the market following the EU referendum – several significant deals look likely to go ahead, which can only be a vote of confidence in the city. However, it’s still too early to say what Brexit’s full impact is likely to be.

“The fundamentals of the market remain strong and the lack of Grade A office space in Edinburgh city centre is pushing up rents – £33per sq. ft., previously considered ‘super-prime’, was achieved in the city during Q2. As Grade A space continues to be squeezed, this is only likely to continue.

“There is little coming through on the supply side and demand remains steady – particularly from the burgeoning TMT sector. There are a healthy number of requirements being circulated, although this should be treated with a note of caution – a decent proportion of these are potential renewals for Q1 and Q2 2017.”

Meanwhile,  Glasgow saw its best second quarter of office space take-up for almost a decade in 2016. Knight Frank’s figures showed that 149,527 sq. ft. of office stock was let in Glasgow during the period April – June 2016 – the highest since 2007.

This quarter’s activity was mainly driven by two large occupancy deals in the city, involving AXA Insurance at Glasgow’s Cuprum building and Regus at Tay House.

 

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