Capital office market boost as AAM takes two floors at 40 Princes St

The move, which had been rumoured for some time, will provide a fillip to an office market struggling to recover from several years of stagnant rentals.

It could also raise interest in other developments in Edinburgh's east end such as the vast Waverley Gate complex, as businesses consider locations away from the West End.

AAM's new home at the former C&A building overlooking Waverley Station has been empty since its conversion in 2005. The glass-fronted office space stretches over the upper five floors, while clothing retailers Mexx and H&M occupy the lower levels.

AAM has signed a ten-year lease to occupy 17,600sq ft. The investment firm, which will sub-let part of the seventh floor, is relocating from its existing Edinburgh headquarters on Haymarket Terrace. The move, involving about 70 staff, is expected to be completed by the end of the summer.

Baker Tilley, the accountancy firm, had been tipped to take a similar amount of space in 40 Princes Street, but it is thought the company is now eyeing phase two of Edinburgh Quay at Fountainbridge.

Anne Richards, AAM's chief investment officer, described the company's new home as a flagship location.

"It is appropriate for a company of Aberdeen's size and international reach to be located in the heart of Edinburgh's thriving financial district," she said.

"The new office and facilities provide an excellent workplace environment both for our staff and to welcome clients from around the world."

This month, AAM unveiled record profits and new business at the half-year stage, putting the split-capital investment trusts fiasco firmly behind it.

Craig Watson, associate director at property adviser Jones Lang LaSalle, said there had been significant interest in the building from a number of financial services firms. "The office market is growing in confidence with the number of requirements on the increase," he said. "However, this transaction is one of only a handful of significant lettings in Edinburgh over the last 12 months.

"Interest is also good for the remaining floors. We are targeting smaller occupiers as we can split the building up into suites from about 3,500sq ft."

JLL and King Sturge acted for the developer, Redevco, while Ryden represented AAM.

Although details of the letting were not disclosed, the quoting rent for the building is 27 per sq ft. Redevco investment director Adam Starr said: "With the current level of interest, we look forward to soon welcoming other tenants of Aberdeen's quality to the building."