Office rent gap grows between key cities

Published on Saturday 23 August 2008 14:01

SCOTLAND'S two biggest cities are seeing marked differences in the rent paid for office space, with Edinburgh defying the credit crunch.

Headline rents for offices in Edinburgh city centre have edged up from 29 to 29.25 per sq ft over the past three months, despite the economic slowdown, according to property firm Cushman & Wakefield.

In Glasgow, they have been static at 27.50 per sq ft since the first quarter of 2007.

The 30 per sq ft mark is expected to be hit in Edinburgh by the end of the year for new top-grade offices. While Glasgow office rents will increase, they are expected to only rise past 28 per sq ft over the next six months.

Chris Cuthbert, Cushman & Wakefield's head of office agency in Edinburgh, said it is the lack of "grade A" development that will continue to put upward pressure on prices in the capital.

He said: "Pre-letting has returned to the market and with a number of tenants looking likely to secure accommodation by the end of 2008, it is anticipated that 30 per sq ft will be achieved by the end of the year.

"Until Exchange Place completes in spring 2009 there are no new prime, grade A developments in the pipeline."

Unlike Glasgow, Edinburgh has not experienced a big drop in the number of new office leasings. Total take-up for the first six months of 2008 was 225,000 sq ft, only marginally less than 245,000 sq ft in the same period last year.

Last week, Unesco started an investigation into Edinburgh's World Heritage status, sparked by concern over the impact of new developments, such as Caltongate.

If it decides to remove the city's Heritage Status, it could have a positive long-term impact on the office market.

Cuthbert said: "Developers have been more attracted to the faster track planning applications in other UK regional cities such as Glasgow, as planning delays are hugely expensive to them.

"Edinburgh is perceived by some to be a place that cannot move forward."