More activity expected
Edinburgh office market to pick up after steady year
Capital Square is currently under way
Edinburgh’s office market is expected to pick up after a steady year of activity in 2019, according to property consultants JLL.
Approximately 650,000 sq ft was transacted over the year, 5% short of the ten year average, and as predicted, behind 2018’s final take up which hit 1 million sq ft.
Political uncertainty, a lack of choice, and growing rents all had a slowing effect in 2019 according to JLL, which believes the market will be more active in 2020 following a decade of doubt.
Ben Reed, director in the Edinburgh office, said: “Occupiers were certainly more nervous about short term economic prospects in 2019 due to Brexit and the General Election.
This type of uncertainty has been commonplace in Scotland over the past decade. It can knock confidence which is unquestionably bad for business. This led to many relocation decisions being put on hold in 2019.”
The number of office requirements logged in 2019 was equal to the number logged in 2018, however the number of viewings had dropped by over 35%, suggesting occupiers were testing market conditions but not serious about progressing a relocation.
There was a dramatic rise in re-gears – the renegotiation of a lease during the term – in 2019, with many occupiers choosing to stay put rather than relocate. There was approximately 275,000 sq ft of re-gear transaction in more than 26 deals (a 45% increase on 2018), compared to the five year average of approximately 200,000 sq ft in 23 deals a year.
Notable re-gears included Citi at Holyrood Park House (17,000 sq ft), Aecom at Tanfield (17,000 sq ft) and JPI Media – owner of The Scotsman newspaper – at Orchard Brae House (15,000 sq ft.)
Forecasting the year ahead Craig Watson, director at JLL in Edinburgh, said: “2019 should be remembered as a year during which the market continued to prosper despite the odds stacked against it.
“An office is no longer just somewhere to work, so in 2020 we predict a more energised market with sustainability and technological advances becoming more prevalent for both occupiers and landlords.
“Key city infrastructure improvements such as new segregated cycleways, the tram extension, new pedestrianisation zones and the completion of Edinburgh St James will also undoubtedly improve the attractiveness of the city for businesses.”
The next major new build completions in Edinburgh are Capital Square by BAM in early 2020 (120,000 sq ft), and New Fountainbridge by Vastint (60,000 sq ft) in late 2020.
In 2021, The Haymarket mixed use development by M&G Real Estate and Qmile Group will deliver 110,000 sq ft of new offices in its first phase with around 270,000 sq ft in a second phase.
Work is also near completion at New Waverley while Parabola’s development at Edinburgh Park is under way.