Microsoft office move sets a rental record

Published on Sunday 27 January 2008 21:24

COMPUTER giant Microsoft has signed a record lease for a flagship Edinburgh development as part of expansion plans in Scotland, The Scotsman can reveal.

The US firm has agreed a 15-year contract on two floors of Waverley Gate – the city's former General Post Office – which has lain empty for almost three years since it was refurbished.

Microsoft said last night the move signified its commitment to Scotland and its plans to grow its business here, and hopes the deal will attract more blue-chip companies to the Capital.

Based on the rental values the deal will see Bill Gates' company pay 362,200 per year for part of the prestige building just off Princes Street.

Developers Castlemore said the figure indicated confidence in the commercial property market, despite recent concerns over a slump.

The 100 million energy efficient redevelopment had previously struggled to attract tenants, although the Microsoft brand had been linked with it in recent months. The firm already has an office on George Street, which it moved into in 1998 with 15 employees, a number it planned to double.

Raymond O'Hare, director of Microsoft in Scotland, said: "This is an important move for Microsoft in Scotland.

"Waverley Gate provides exactly the type of high-quality office environment that our customers, business partners and our people deserve.

"This superb facility will provide a great base from which we can continue to grow our Scottish business, and showcase the many ways in which Microsoft can positively impact the Scottish economy and community."

The deal is to lease a total of 12,100sq ft over the top and fourth floors of the landmark building.

The rent comes in at 31 per sq ft for the 3,500 sq ft top floor – a figure developers say is the highest rate in the city – and 29.50 per sq ft for the 8,600 sq ft fourth floor. Previously, the most expensive rent in Edinburgh – and, at the time, Scotland – was paid by Scottish Widows, in 2000 when the fund management firm signed a 20-year deal which set rent at 29 per sq ft of its premises on Morrison Street.

Ben Reed, director with Jones Lang LaSalle Edinburgh, which acted for Microsoft in the deal, said there had been a drop in the available top grade office space in Edinburgh.

But he added that the Microsoft deal would "no doubt assist in attracting other blue-chip organisations to the building".

Nigel Crump of Castlemore, said the presence of the "iconic global brand not only reflects the company's confidence in Waverley Gate, but also Edinburgh and Scotland".

The move follows the relocation of a number of key financial players to Edinburgh's east end, including Citigroup, Baillie Gifford and Edinburgh Fund Managers.

Confirmation of the deal comes as figures show office take-up in Edinburgh has hit a four-year high.