Edinburgh’s office market is in rude health but property experts have reiterated their warning of a “critical” shortage of supply in the city centre.
Total take-up of office space in the Scottish capital reached 350,000 square feet between April and June – more than double the figure for the first quarter of the year, according to the latest figures from property consultancy JLL.
This was spread across 45 deals, the largest being a flexible agreement with art charity Edinburgh Palette which took 110,000 sq ft at 525 Ferry Road to form a creative hub for artists.
The second quarter’s “stand out” occupational deal saw investment manager Baillie Gifford pre-let 60,000 sq ft at The Mint Building on St Andrew Square, further strengthening the area as a “prime destination for occupiers”.
JLL said it was involved in the three largest deals of the quarter.
The second quarter was significantly busier than the first, when some 140,000 sq ft changed hands, taking Edinburgh’s half-year total to nearly half a million square feet. By comparison, in the first half of 2017, a decade high of 770,000 sq ft was transacted.
JLL said that despite the strong levels of occupier activity in recent quarters, there was a very low pipeline of new office space coming through.
Geoff Scott, associate director at JLL, said: “The market for Grade A space is becoming critically short with strong pre-letting activity with a number of occupiers circling on the few remaining options available in the city centre.
“There is only one new development due for completion in 2018 at 2 Semple Street and only one major refurbishment, 80 George Street, which will be ready in December.
“The sale of The Haymarket to M&G will however likely help redress the balance going forward as part of the next wave of major new development in Edinburgh.”
He added: “With a strong stream of demand from multiple sectors including financial, professional services technology and co-working operators, we anticipate seeing further rental growth and tightening of incentives in the second half of the year for the best offices, particularly in the city centre.”
Baillie Gifford emerged as the up-coming tenant of The Mint Building last month, with the firm agreeing a pre-let deal for the offices which form part of an £85 million regeneration project at The Registers in the heart of the capital.
Baillie Gifford will take over all 60,000 square feet of Grade A office accommodation, extending over the ground floor entrance, seven upper floors and including fifth and sixth floor terraces. The building will be capable of accommodating up to 700 members of staff once completed in early 2019.
Earlier in June, it was revealed that Hines, the global property firm, had agreed to forward purchase The Mint Building – also known as 20 West Register Street – on behalf of its European Core Fund.
The building was acquired from Edinburgh-based property development and investment company Chris Stewart Group for an undisclosed sum.
Stewart said: “The [deal] with Baillie Gifford is very positive news for Edinburgh.”