Landmark deal for city centre jobs

● 200,000 sq ft UK government office site takes occupier activity to decade high

Almost 3,000 UK civil servants will be relocated into the centre of Edinburgh in the largest office leasing deal the city has seen in more than two decades.

Staff from government departments including HMRC will work at a hub at New Waverley, formerly Caltongate, measuring about 200,000 square feet in 2020.

The hub is on a lease of at least 20 years.

Edinburgh has seen its largest office leasing deal for more than two decades, which has helped the Scottish capital achieve a record level of halfyear occupier activity.

The UK government is locating a new hub at New Waverley, formerly Caltongate, measuring about 200,000 square feet and moving 2,900 civil servants into the city centre premises in 2020.

The hub is on a lease of at least 20 years and will house civil servants from several government departments including HMRC, which will operate one of its 13 regional centres from the site.

Property consultancy JLL highlighted the transaction, and Ben Reed, the firm’s director of office agency, who advised the government property Unit, said :“The big draw of the site, which has transformed the heart of the city’s Old Town, is its strategic location adjacent to Edinburgh’s main railway station… The building is set to be the final phase of this vibrant and successful mixed-use development, which gave our client confidence that the developer could meet their relocation programme.”

JLL said the deal helped office space taken in Edinburgh in the first half reach more than 770,000 sq ft, the highest half year in the past ten years, up by nearly a third from the same period in 2016, and despite last month’s general election hampering some decision-making.

The property specialist, which has offices in Edinburgh and Glasgow, also said it was involved in nearly two thirds of activity, with roughly 550,000 sq ft transacted in the second quarter alone.

Other deals highlighted were Australian financial services company Computershare announcing plans to create 300 jobs at a new 40,000 sq ft technology centre in the 4 North building, and State Street Bank is taking a preletting of 65,000 sq ft at Quartermile 3.

Looking ahead, JLL forecast that the robust overall performance of Edinburgh’s office market during the first half will continue into the third quarter, with various “notable” deals under offer, and strong appetite from the tech, media and telecoms sector.

Reed added that while the first half was “record-breaking”, the numbers “don’t necessarily reveal the true health of Edinburgh’s office market”.

He highlighted the snap general election, leading to “a drop-off in inquiries and a lack of urgency to finalise ongoing occupier transactions. Notably, there has been a slowing of requirements amongst mid sized occupiers.

“As we move through Q3, we do expect to see another strong quarter as some larger deals are finalised. However, as has been the case in previous years, there continues to be a chronic lack of supply in both grade A and refurbished stock coming to the market over the next 18 months which could see activity at all ends of the market slowing.”

JLL consequently warned that the city must invest in new development.