Setback for lettings as occupiers extend leases

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A MUCH anticipated boost to the Edinburgh city centre lettings market expected this year and next will be delayed as occupiers temporarily extend leases on short terms, according to Jones Lang 
LaSalle (JLL).

As leases expire, JLL said many occupiers are now re-gearing with short-term leases, which means relocation is postponed until 2016 or 2018 when the spike in “long-term lease events” is now likely.

Cameron Stott, director of JLL, said: “Because of economic circumstances, more have renegotiated to stay where they are, introducing a break option in three to five years. It has not gone away for ten or 15 years – it is really just a short-term period whereby they get over this difficult economic period and have an opportunity to relocate in a stronger economic environment.”

But JLL expects that more cash-conscious businesses will choose to locate at the currently “suffering” Edinburgh Park. Although current enquiries for Edinburgh continued to focus on city centre accommodation, supply is “gradually eroding”, JLL said.

Stott said tram works and road closures affecting Edinburgh Park have caused stagnation for the district for the past five years, reflected in the widening gap between rental prices. Rents have hit a new low of around £14 per square foot compared with £27 in the city centre. JLL estimates the vacancy rate at Edinburgh Park is 20 per cent, versus 7 per cent across Edinburgh.

He said: “The rental differential between the city centre and the West End is beyond where it ever has been in the past. “Because of availability of supply and reduction in rent – you have a very well serviced location – it does have a lot to offer. Because it has been a building site with the tram line being built it has suffered. We are forecasting Edinburgh Park will come back.”