Real estate demand

City sees positive start to office lettings market

10 George Street

10 George Street: new home for MacRoberts

Edinburgh’s office market got off to a positive start in 2021, according to new analysis suggesting demand remains high in spite of lockdown and work from home pressures.

Commercial property consultancy Knight Frank says about 90,000 sq ft of offices were transacted in the first quarter of the year across the city.

This compared to 68,915 sq ft during the same period in 2020, largely before lockdown began to take effect in the UK.

Among the deals concluded between January and March 2021 was Motorola taking 10,844 sq. ft. of office space at Caledonian Exchange, on which Knight Frank represented the landlord.

Other significant deals included Trustpilot taking 9,500 sq ft at 28 St Andrew Square and MacRoberts, the law firm, securing 6,500 sq ft at 10 George Street.

Simon Capaldi: ‘encouraging start’

Demand for office space in Edinburgh has remained robust throughout the pandemic with about 500,000 sq ft of requirements are still on the market. The development pipeline has, however, continued to be restricted, with 281,000 sq ft of new space under construction. 

Last year, Edinburgh saw 490,585 sq ft of take-up and a new headline rent of £37 per sq ft was set in the city, despite the economic uncertainty caused by the pandemic.

Simon Capaldi, office agency partner at Knight Frank Edinburgh, said: “While much of the economy remained shut down, it has, nevertheless, largely been an encouraging start to 2021 for Edinburgh office take-up.

“Some of the larger deals this quarter were held up due to ongoing uncertainty, but their conclusion is indicative of pent-up demand and, with many businesses beginning to re-open and schools returning, there is an air of positivity.

“Part of that is because there is still a steady stream of active requirements coming from companies as they start to look beyond Covid-19.

“Even though few people have spent much time in an office in the last 12 months, they are still playing a central role in many occupiers’ strategies.

“If anything, the flight to quality that took hold last year has only increased as occupiers look to best-in-class space to accommodate the return of staff and provide them with the working environment they need.

“The pandemic has also brought about a real focus from both landlords and occupiers alike on ESG – environmental, social and corporate governance concerns.

“Landlords are looking closely at the green credentials of buildings, especially their BREEAM certifications, while occupiers are exploring how their offices can contribute to the wellness of their teams.

“With both themes coming to prominence during the pandemic, they only look likely to continue for the foreseeable future.”

Related post: Offices earmarked for Standard Life back on market

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