THE Edinburgh and Glasgow office markets are showing ‘positive signs of recovery’, according to new research by CBRE.
The real estate advisor has released its latest figures on key office markets in Scotland during the final quarter of 2023. While take up was slightly down on the previous three months, Scotland’s two largest cities have seen ‘significant requirements’ for space from large corporates and a growing demand for flexible space for companies bringing employees back to the office.
Angela Lowe, senior director at CBRE said, “The Scottish office markets are continuing to perform well with demand for flex space in particular continuing to be high, with operators reporting a significant number of new viewings every day. With some of the newer flex spaces offering services like beer on tap and in-house baristas, it’s easy to see the attraction of these centrally located workspaces for companies keen to lure reluctant employees back to the office.
“Demand for best-in-class offices with strong sustainability credentials also continues to grow from occupiers, particularly large corporates.”
Despite a ‘slightly subdued’ end to the year, a ‘renewed sense of optimism’ is returning to the Edinburgh market, according to Lowe.
The research shows that 157,807 sq ft of office space was taken up in the Scottish capital in the final quarter of the year – down 3% on Q3. In total 618,148 sq ft was let during 2023, fuelled by demand from the financial and professional sectors.
Lowe said, “While the actual square footage was down slightly on Q3, there were a significant number of deals – 51 – in the final three months of the year. This brings the end-of-year total to 165 new transactions, up 13% on the previous year, and indicates the growing confidence in the Edinburgh office market.”
Although Glasgow saw a growing number of medium to large occupiers leasing new offices towards the end of year, annual take up for 2023 was down by 6% at 429,948 sq ft.
However, there are some signs of recovery according to Sarah Hagen, director at CBRE in Glasgow, with over 100,000 sq ft of deals near completion throughout the city.
Hagen said, “Although demand in Glasgow currently sits at around 700,000 sq ft which is back to post-pandemic levels, many occupiers have been reviewing the market for some time. Once key lettings come forward in the early stages of 2024, we anticipate a surge in activity from those occupiers who once thought they had time on their hands, as supply continues to reduce and competition for best space increases.”
The final quarter of the year saw office take-up totalling 97,528 sq ft. Of these, nine transactions were for floorplates greater than 10,000 sq ft – a vast improvement on the previous year according to Hagen. She says it suggests corporates are making positive steps to engage in the market, as they gain more confidence in embracing hybrid working following the pandemic.
However, with the total number of deals for 2023 topping out at 150, Hagen says demand for offices under 2,500 sq ft continue to dominate the Glasgow market.
