Edinburgh

Following 3 strong quarters of take-up, as expected, activity in Edinburgh city centre declined in Q1 totalling 95,543 sq ft, which reflects a 34% decrease from the five-year average level.

Professional services came out as the most active business sector in Q1, accounting for 54% of take-up above 5,000 sq ft. Key deals within the sector included Shoosmiths LLP and Dentons which agreed to 16,383 sq ft and 14,962 sq ft respectively at Haymarket square.

These two deals took the last remaining space at the Haymarket Square development and as a result there is currently no new build office space under construction in Edinburgh city centre that is available to let.

Given the current development cycle and the planning/site constraints in Central Edinburgh, there is unlikely to be any new build offices completing in Edinburgh city centre until at least 2026. This will limit office relocations in the city centre as we expect the trend for ‘occupiers seeking best in class’ space will continue and many existing occupiers will look to extend existing leases or consider out of town locations where fully refurbished and new accommodation has and will be delivered.

During the first quarter of the year, Edinburgh’s office availability reduced by 19% and now totals 681,000 sq ft. The vacancy rate has also reduced, falling from 6.5% in the Q4 2021 to 5.3% at the end of Q1 2022.

This bodes well for the comprehensive refurbishments underway, that will partly fulfil occupier demand for quality space. These include 50,000 sq ft at Excel House, Semple Street, and 80,000 sq ft at 60 Morrison Street. There is upward pressure on prime rents which remain at £38 per sq ft. There is also pressure on incentives which are beginning to reduce from the current average based on 15-months for a 10-year term.

In the out-of-town market, while take-up fell 41% below the 5-year quarterly average level and 60% below Q4 2021, there is growing momentum, particularly in West Edinburgh where prime rents increased by 21% to £29 per sq ft, which is the quoting rent at the newly completed 80,000 sq ft 1 New Park Square. There are also full building refurbishments underway at 1 Lochside Avenue (11,000 sq ft remaining), Broadway Park (39,000 sq ft) and 10 Lochside Place (20,000 sq ft) which will address growing occupier ESG, wellness and sustainability requirements.

TAKE UP: Q1 2O22

City Centre

95,543 sq ft

Out of Town

21,587 sq ft

HEADLINE RENT

City Centre

£38 per sq ft

Out of Town

£29 per sq ft

UNDER CONSTRUCTION

Total

390,000 sq ft

Prelet

100%

PRIME YIELD

Q1 2022

4.5%

TOP FIVE DEALS: Q1 2022

KEY SECTOR ACTIVITY: 12 MONTHS TO Q1 2022

TMT & creative

29%

Professional services

17%

Government services

16%

TAKE-UP

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