The latest research from commercial property consultancy CBRE shows that the market in Edinburgh has experienced a surprisingly positive start to the year, with 202,500sq ft of take-up for the first quarter of 2019 and an increase in occupier demand in recent weeks.
This Q1 figure is 49 per cent higher than the 135,842sq ft transacted in the same period in 2018, and was largely due to the sale of the 48,614sq ft Westfield House in Murrayfield to the Church of Scientology.
In addition, regears and lease renewals in the Capital totalled some 19,335sq ft in the same time frame.
Grade A take-up in Edinburgh city centre accounted for 59,081sq ft – or 27 per cent – of the Q1 total and was driven by the leasing of 31,000sq ft within the recently refurbished Exchange Crescent to a technology company.
This figure is up from the same quarter last year, when only 18,409sq ft of Grade-A space was transacted.
Beverley Mortimer, senior surveyor for CBRE Scotland’s Advisory and Transaction Services team, says: “The general sentiment is that political uncertainty is introducing a slight hesitancy to the occupier market. However, very few – if any –occupiers have attributed Brexit as the main reason for not progressing with a planned or potential move.
But, she adds: “On a positive note, in the last few weeks there has been an increase in occupier demand and several larger requirements of 10,000sq ft-plus have entered the market.”
Mortimer continues: “A trend that has been on the increase is landlords undertaking refurbishment of second-hand Grade-A accommodation with an objective of retaining existing occupiers and attracting new tenants to space that may have been slow to let.
“Kennedy Wilson has recently replaced the external cladding and completed a full refurbishment of all vacant suites and common areas at the prominent Exchange Tower development, while Saltire Court has also benefited from significant investment in its large common areas, bringing a much more contemporary look to the reception and atria space.
Exchange Tower occupies pride of place at the junction of Canning Street and Torphichen Street, while Saltire Court is a short distance away at Castle Terrace.
Mortimer adds: “Exchange Crescent has similarly witnessed a full refurbishment of common parts and vacant suites that has resulted in the letting of space which had remained empty for some time.
“This is indicative of the ever-increasing importance of accommodation when attracting and retaining staff.”
But the CBRE report notes that new-build Grade-A office supply in Edinburgh remains a critical issue.
Currently, there is approximately 55,000sq ft of available space remaining at the Capital Square development in Morrison Street ahead of its scheduled completion in May next year.
Meanwhile, 2 Semple Street has just 35,000sq ft available, and only about 30,000sq ft of sublet space is on offer at 20 West Register Street, otherwise known as The Mint Building.