Signs of pick-up
Covid creates mixed outlook for office demand
One of the biggest lettings of the quarter was Baillie Gifford’s planned new HQ at Haymarket
Office take-up in the third quarter in Scotland’s biggest cities remained mixed as senior figures in the sector insists there remains plenty of demand for space despite the home-working phenomenon.
New figures from CBRE show demand in Edinburgh at the highest it has been since Q2 2018, helped by the largest ever pre-let deal recorded in Edinburgh, Baillie Gifford’s new HQ at Haymarket.
It recorded 315,977 sq ft of office space transacted, a 135% increase from the same period in 2019 and 73% up on the five-year average.
This brings the total take-up for 2020 so far to 473,483 sq ft, which is just 4.7% down on the same period in 2019, bringing levels more in line on a year-on-year basis.
Angus Lutton from CBRE in Edinburgh commented: “Whilst we expect there to be more challenging conditions in the last part of the year, encouragingly, new requirements are being brought to the market and viewings are taking place again as companies resume searches which had previously been placed on hold.
“Firms have begun to adapt to the changes that COVID-19 has brought but it is still too early to fully understand the lasting impacts.
“In some instances requirements have been reduced whilst other companies demand more space for the eventual return of their staff at a lower density.
“A common theme in all markets is the flight to quality space, as ironically the workplace becomes more important in the post pandemic world.”
However, take-up for the Glasgow office market totalled 86,615 sq ft, a 76% drop from the same period in 2019 and 66% down on the Q3 five-year average.
This brings the total take-up for the year so far to 343,359 sq ft, which is 48% down on the same period in 2019.
Alistair Urquhart, director at CBRE in Glasgow commented: “Despite a continuing challenging climate, we’ve been encouraged by improving levels of demand for space.
“There were over 30 new requirements for office space in Glasgow in the third quarter as office occupiers sought to move to business space that is suitable for the needs of both their workload and, perhaps more importantly, their staff.”
Aberdeen saw a total of 81,723 sq ft transacted, a drop of 33% from the same period in 2019 but up almost 150% from the previous quarter.
This brings the total take-up for the year to 268,871 sq ft, which is encouragingly still marginally up on the same period in 2019.
Derren McRae, managing director of CBRE’s Aberdeen office, said: “As we are seeing across various markets, the climate continues to be challenging, however we have seen a significant increase in activity in the third quarter of the year with some key transactions taking place.”
Stewart Taylor, head of CBRE’s Scottish office agency business, echoed recent industry views that forecasts of the death of the office are “misplaced”.
He said: “A greater prevalence of flexible working does not translate into occupiers taking less office space, but different space, as the need to exchange ideas, collaborate and innovate outweighs short term concerns.
“There is an industry-wise acknowledgment, supported by research, that despite ongoing restrictions the physical office is here to stay, as businesses plan to adopt hybrid work practices.”
Mike Irvine, director in Savills office agency team in Edinburgh, made similar comments last month, saying that while home working will remain a feature of working life for some time firms are “ill-advised” to make short term decisions.