Edinburgh facing growing crisis
Office shortage now ‘critical’ threat to growth
A new report from JLL says availability has fallen to its lowest level since the crash in 2008 and is reaching a “critical stage”.
With vacancy rates falling to 4.8%, existing businesses wanting to expand or those looking to come into the city are facing increasingly “limited options”, says the report.
The city has been a victim of its own success with record demand and take-up in the past two years being the main cause of the shortage. In 2015 Edinburgh posted the highest take-up of office space since 2001.
However, there has also been a loss of 800,000 sq ft of space to hotel and residential use and Mr Stott, a director at JLL, says this has to be stopped to provide valuable office space for businesses.
He said: “We’ve been saying this for years, but the availability of office space in Edinburgh is now reaching a critical stage.
“This is not simply a property issue. The lack of supply threatens to stifle economic growth in the capital by simply not being able to accommodate any expansion from within Edinburgh’s existing business community or any growth from start-ups.
“This, in turn, will have a serious impact on any employment growth prospects and inward investment into the city.
“Given the growth we’ve witnessed in recent years from Edinburgh’s thriving technology and financial services sectors, we need to build upon these opportunities and provide the infrastructure in which these businesses can grow and thrive.
“For that to happen, Edinburgh must address the challenges of developing new offices in the city in terms of planning, funding and preventing the conversion of existing offices to alternative uses.”
JLL believes the market will remain tight until 2018. Among the biggest developments are the 240,000 sq ft under development at Quartermile and St Andrew Square (above), but all of this has been pre-let to FanDuel, Cirrus Logic (both QMile) and Standard Life Investments (St Andrew Sq).
The next wave, including the Mint development in St Andrew Square, the first phase of the Haymarket, and the final building at QMile, are not due to complete until the end of next year.
The refurbishment of 40 Torphichen Street, which will be unveiled at the end of this month, will provide some immediate relief to the pressure.