Edinburgh has emerged as Britain’s hotspot for office rental growth, thanks to a lack of new developments.
The capital is poised to see above-average growth in rents over the next two years, according to a new study from property consultancy JLL.
The report – European Office Rental Growth Hotspots 2018 – identifies ten markets in Europe set to experience “supply-led office rental growth outperformance” in the next two years. Amsterdam will see the greatest increase, followed by Stuttgart, Stockholm, Munich, Prague, Dublin, Edinburgh, Barcelona, Warsaw and Utrecht.
The Scottish capital is the UK’s top ranked city within JLL’s “supply sensitivity index”. The index takes into account seven metrics – such as future supply and rental sensitivity – across 35 European cities over a 20-year period.
Within Edinburgh, high-quality space is said to be in increasingly short supply, leading to annual rental growth of 3.2 per cent. Despite a number of headwinds, the outlook for landlords remains “positive”, with tight supply, slow development and active pre-letting expected to drive rental growth in the city.
JLL director Cameron Stott said: “Given how long we’ve been talking about Edinburgh’s constrained office supply, it comes as no surprise that the capital ranks highly for supply-led rental growth. While it is good news for landlords, it’s not such welcome news for occupiers.
“It’s not all doom and gloom from the supply side. New developments such as Haymarket, as well as plans by Parabola for a new ‘urban quarter’ in Edinburgh Park, will provide much needed relief to the city’s stock of new Grade A office supply.”