Releasing its Big Six UK cities report, property consultancy JLL said office leasing across Scotland’s two biggest cities surpassed 1.2 million square feet by the end of 2021.
Edinburgh is said to have finished the year particularly strongly, with 296,200 sq ft in new transactions - its second-best quarter since the third quarter of 2018 - pushing annual take up to 711,400 sq ft. That total is just 14 per cent below the capital’s ten-year average.
Top-quality Grade A office space remained in high demand, experts noted, with vacancy at just 1.1 per cent by the end of the year. However, a surplus of Grade B and Grade C space pushed Edinburgh’s overall vacancy rate up to 5.2 per cent.
The city was buoyed by some £320 million of investment - in line with the ten-year average of £316m. The largest transaction in the closing quarter of 2021 was CBREGI’s purchase of Exchange Place One for £59m.
In Glasgow, leasing volumes reached 496,700 sq ft in 2021, which comfortably exceeded the previous year during the initial periods of lockdown but remained down on the ten-year average. Overall vacancy increased to 6.9 per cent in the fourth quarter, although Grade A space remains scarce, with vacancy sitting at just 1.8 per cent.
At £251m, investment levels were the highest seen since 2018 and only marginally below the ten-year average of £263m.
Alasdair Humphrey, head of JLL in Scotland, said: “The office markets of the Big Six act as an important barometer for the health of the regions, and these figures point to a positive post-Covid resurgence in Scotland which we’re seeing carry through from the second half of last year into 2022.
“There is strong momentum in the Edinburgh and Glasgow markets, which are now close to pre-pandemic occupancy levels.
“Real estate and infrastructure investment are at the centre of rebalancing the UK’s unequal economic geography, and surpassing pre-pandemic occupancy levels this year is likely to spell good news for local growth.”
The Big Six report found that average leasing volumes across the UK grew by almost one million sq ft in 2021 but remained 11 per cent below the ten-year average (4.6 million sq ft).
There were 11 transactions in excess of 50,000 sq ft across the Big Six locations, with seven occurring in the second half of 2021. The largest deal was Roku’s leasing of 115,066 sq ft at the new-build Circle Square in Manchester.
Elaine Rossall, head of UK offices research at JLL, said: “We’ve seen a significant uptick in city footfall in recent weeks and, as firms look to facilitate more collaborative and attractive workspaces for their teams, we can expect new build space, especially those with a high sustainability, wellness and smart technology focus to set new standards across the Big Six.
“That said, we should be mindful of the gap between prime space and the rest widening, with occupants and the race to net zero necessitating investment across the board.”