Bright start for Edinburgh office market
● Survey highlights an encouraging first quarter for commercial property in the Capital as it begins to reopen for business,
Edinburgh’s office market got off to a positive start in 2021, despite ongoing lockdown measures restricting deal activity, according to analysis from Knight Frank.
The independent commercial property consultancy stated that approximately 90,000 sq ft of office take-up was transacted in the first quarter of the year across the city.
This compared to 99,000 last quarter and 68,915 during the same period in 2020, largely before lockdown began to take effect in the UK.
Among the deals concluded between January and March 2021 was Motorola taking 10,844 sq ft of office space at Caledonian Exchange, on which Knight Frank represented the landlord.
Other significant deals included Trust pilot taking 9,500 sq ft at 28 St Andrew Square and law firm Macroberts securing some 6,500 sq ft at 10 George Street.
Demand for office space in Edinburgh has remained robust throughout the pandemic – with about 500,000 sq ft of requirements still on the market.
However, the development pipeline has continued to be restricted, with just 281,000 sq ft of new space under construction.
Last year, Edinburgh saw 490,585 sq ft of take-up and a new headline rent of £37 per square foot was set in the city, despite the economic uncertainty caused by the coronavirus pandemic.
Simon Capaldi, office agency partner at Knight Frank Edinburgh, says: “While much of the economy remained shut down, it has, nevertheless, largely been an encouraging start to 2021 for Edinburgh office take-up.
“Some of the larger deals this quarter were held up due to ongoing uncertainty, but their conclusion is indicative of pent-up demand and – with many businesses beginning to re-open and schools returning – there is an air of positivity.
“Part of that is because there is still a steady stream of active requirements coming from companies as they start to look beyond Covid-19.
Capaldi explains: “Even though few people have spent much time in an office in the last 12 months, they are still playing a central role in many occupiers’ strategies. If anything, the flight to quality that took hold last year has only increased as occupiers look to best-in-class space to accommodate the return of staff and provide them with the working environment they need.
“The pandemic has also brought about a real focus from landlords and occupiers alike on ESG – environmental, social and corporate governance concerns.
“Landlords are looking closely at the green credentials of buildings, especially their BREEAM certifications, while occupiers are exploring how their offices can contribute to the wellness of their teams.
“With both themes coming to prominence during the pandemic, they only look likely to continue for the foreseeable future.”