Hope for capital’s office market

The fundamentals of Edinburgh’s office market remain strong despite take-up in the centre of the city falling “significantly” below average levels in the second quarter, according to Savills.

The property agent believes the UK regional office market (excluding central London and the South-east) will see rents remain stable despite muted levels of take -up as a result of the Covid-19 pandemic. It said this can be attributed to record low vacancy rates, which currently average just 7. 5 p er cent across the “big six” regional cities – comprising Edinburgh, Glasgow, Birmingham, Bristol, Leeds and Manchester.

Savills said its research shows Edinburgh currently has the lowest supply of available office space in core Scotland (at about 600,00 square feet, of which just over half is grade A) and the second-lowest supply of the “big six”.

Mike Irvine, director in Savills’ office agency team in Edinburgh, said: “It was no surprise that [second- quarter] take-up in Edinburgh city centre was significantly below average levels as the Covid-19 pandemic caused take-up across all major UK office markets to fall. However, we are confident that once a level of certainty returns to the UK economy, occupier activity in Edinburgh will resume to more normal levels. While we are likely to continue to see reduced levels of take-up in the interim, we are of the view that rents on quality product will remain strong, given the constrained pipeline. There are currently a number of significant requirements in the market that we believe will underpin our view on rents.

“It is still far too early to be able to assess the true impact of homeworking on businesses, and that making ‘knee-jerk’ reactions in terms of reducing op era tional prop er t y is ill-advised. The true impact of significant homeworking on business productivity may not be felt for several months – or even years.”