FNZ takes new home as activity rises in city offices
The building in West Register Street will be occupied by FNZ
Second quarter data for Edinburgh and Glasgow from real estate adviser CBRE confirms other recent figures showing an uplift in activity.
Among the latest deals is the assignation of the Chris Stewart Group development in West Register Street, Edinburgh from Baillie Gifford to the fintech platform FNZ. Baillie Gifford announced in 2018 plans that it planned to occupy the building but later opted for the new Haymarket site now under construction.
Stewart Taylor, head of CBRE’s Scottish Advisory and Transactions business, commented: “As restrictions have begun to lift across the country, we’ve experienced a much busier and more positive second quarter with some significant deals transacted.
Occupiers are increasingly comfortable with the shape of their businesses going forward and while there will undoubtedly be directional changes, many are now able to set out their occupational strategies.
“With quality of space and ESG now at the top of many occupiers’ agendas, we expect to see further activity across the rest of the year.”
Take-up for the Glasgow office market rose 60% from the first quarter to 118,628 sq ft and 94% from the same period in 2020.
The biggest deal of the quarter was at 200 Renfield Street, with Instant Offices c/o DWP taking 35,787 sq ft across two floors.
There was more pre-let activity at 177 Bothwell Street with BNP Paribas letting 20,600 sq ft. The NatWest group took over 18,500 sq ft of office space at 110 Queen Street in another sizeable deal.
Current office supply sits at 1,859,455 sq ft, up some 23% from the year-on-year figure.
New lettings for Bothwell Street
There is a Grade A vacancy rate of 0.03%. This has led to Glasgow’s prime office rents growing to £34.50 per sq ft in the last quarter.
Andy Cunningham, senior director at CBRE in Glasgow, said: “We are also aware of over 1.3m sq ft of active requirements in the market which further emphasises Glasgow’s ability to make a strong recovery as people eventually return to the office.
“The shortage of Grade A space has led to an increase in prime rents which is very appealing to investors and will hopefully create the space for some much-needed capital markets transactions.
“Looking ahead, landlords will need to adapt to the new, more flexible ways of working coming over the horizon.
“Buildings that do not embrace sustainability will quickly fall behind and this could help bring about further residential and hotel development in the city centre as functionally obsolete offices become vacant.”
Office take-up in Edinburgh soared by 77% over the first quarter to 158,367 sq ft.
Q2 is 49% up from the pre-pandemic levels of Q4 2019 and is expected to improve even further with a large number of deals remaining under offer.
The most notable deals include the 61,237 sq ft assignation of 20 West Register Street from Baillie Gifford to FNZ as well as a letting to the Nursing and Midwifery Council which has taken 11,353 sq ft of space at 10 George Street. The Scottish Salmon Company purchased 28 Drumsheugh Gardens for its new Edinburgh base.
Q2 saw various large vacant office sales including 90,000 sq ft Finance House, which was sold by Lloyds Banking Group. Others of note included the exchanging of contracts at The Younger Building and Drummond House in South Gyle which were both bought by Shelborn Asset Management.
Office supply in Edinburgh currently sits at 1.729m sq ft, representing a fall from both Q1 2021 and from 2020’s final figure. The Grade A vacancy rate is 0.92%.