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
95,543 sq ft
Out of Town
21,587 sq ft
£38 per sq ft
Out of Town
£29 per sq ft
390,000 sq ft
TOP FIVE DEALS: Q1 2022
KEY SECTOR ACTIVITY: 12 MONTHS TO Q1 2022
TMT & creative
This report has been prepared by Avison Young for general information purposes only. Whilst Avison Young endeavours to ensure that the information in this report is correct it does not warrant completeness or accuracy. You should not rely on it without seeking professional advice. Avison Young assumes no responsibility for errors or omissions in this publication or other documents which are referenced by or linked to this report. To the maximum extent permitted by law and without limitation Avison Young excludes all representations, warranties and conditions relating to this report and the use of this report. All intellectual property rights are reserved and prior written permission is required from Avison Young to reproduce material contained in this report.