Edinburgh office market heading for record year
In total, 193,000 sq ft was transacted between July and September, up more than 30% on the same period last year. Occupier take up for the year to date now sits at 605,000 sq ft.
JLL – involved in 27% of transacted space by sq ft – predicts activity levels to continue at a similar pace over the next three months with year-end take-up expected to be well above the five and ten year average, and potentially above last year’s figure which was the highest in over a decade.
There were 53 deals in Q3, bringing the total deal volume for the year to 156, predominantly made up of smaller deals, with an average deal size of 3,791 sq ft.
The most notable transactions were the pre let of 58,567 sq ft to Fanduel at Quartermile 4 (pictured) due for completion in mid-2016, the sale of 40-44 Drumsheugh Gardens extending to 28,490 sq ft to Square & Crescent for residential conversion, and the letting of 11,799 sq ft at Cornerstone on South Gyle Business Park to Blyth & Blyth.
There were no new development completions and supply continues to fall, reducing by 7.6%, with the overall vacancy rate now sitting at 5.1%. The development pipeline is becoming severely constricted with the next development completion – 128,600 sq ft at Quartermile 4 – already pre-let to Fanduel with strong interest registered in the remaining space.
Prime quoting rents remain at £30 per sq ft for existing stock and in excess of £30 for pre lets. Incentive packages are reducing with pressure on quoting rents to rise.
Geoff Scott, associate director, JLL said: “The market is very buoyant and we’re seeing more good sized requirements in the Capital than we’ve seen for some time.
“We expect further pre-letting activity to be announced before the year end which will continue into 2016. The shortage of available supply and the timing of new completions may prove problematic for occupiers who do not have a strategy in place.
“In the city centre especially, supply is severely constrained. This message is now being heard and we are seeing some occupiers with relatively distant expiries start to take action.
“The shortage of supply in city centre should also result in more activity in west Edinburgh aided by the tram which has proved a major boost. If activity continues at the expected rate, we could well see an even better out turn than 2014 which set a ten year high for office transactions in Edinburgh.”