NEW research has revealed that Edinburgh’s office market has seen a ‘strong’ start to the year led by the technology, media, and telecommunications (TMT) sector.
Commercial property consultancy Knight Frank found that the first quarter of 2023 saw another 90,872 sq ft of office take-up, excluding regears. While slightly lower than last year’s 100,856 figure for the same period, this pushed the city’s vacancy rate down to 8.06% for all grades and below 1% for Grade A space.
TMT organisations accounted for the largest share of take-up at 34%. Telecommunications regulator Ofcom secured 9,650 sq ft at Quartermile in the largest deal of the quarter.
Energy companies represented another 20%, with Falck Renewables and Orsted taking 7,147 sq ft each at 2 Lochrin Square. Knight Frank revealed it was involved in four of the quarter’s top five deals, representing 47% of total take-up.
Knight Frank is predicting further rental growth before the end of the year.
Simon Capaldi, office agency partner at Knight Frank Edinburgh, said, “The imbalance between the supply and demand of office space in Edinburgh is reaching chronic levels. While there is new space in the development pipeline, the vast majority of it has been pre-let and only refurbished product is available until later in 2024.
“In fact, much of the best quality space that is available is second hand and there is a real lack of Grade A building stock which can supply floor plates of less than 10,000 sq. ft., where much of the demand is coming from. This is putting pressure on quality stock in the city centre, which may push more occupiers to out-of-town locations.
“The flight to quality amongst occupiers that came about during the pandemic has intensified, with many now insisting on ESG credentials, wellbeing facilities, and prime amenities as part of their property needs. Occupiers are also increasingly looking for landlords to push forward with proposed refurbishment plans ahead of entry this year, with ‘plug and play’ office options also remaining in-demand.”
