Edinburgh office market has strength to ride out coronavirus and recession
Property consultancy Knight Frank said the vacancy rate for all grades of office space across the city was unlikely to exceed 8.5 per cent, less than half the rate registered in the aftermath of the financial crisis just over a decade ago.
The capital’s office market has been “resilient” during 2020, despite the challenges of Covid-19, the firm noted. Further analysis has found that occupiers are still looking for some 500,000 square feet of space, with around 417,000 sq ft of high-quality “Grade A” accommodation available.
The first half of the year saw 136,000 sq ft of space transacted – heavily weighted to the first quarter, prior to the coronavirus crisis and lockdown measures – with re-gears accounting for the majority of activity.
In July, one of the biggest deals of recent years was announced with investment firm Ballie Gifford agreeing to pre-let 280,000 sq ft at the Haymarket Edinburgh development for its new headquarters.
Toby Withall, office agency partner at Knight Frank Edinburgh, said: “Despite uncertainties in the wider economy, with the UK officially entering recession for the first time in more than a decade, there are reasons to be optimistic about Edinburgh’s office market.
“The volume of demand has remained robust, while the supply of new space remains relatively scarce and the development pipeline has been stunted by the effects of Covid-19.
“The Baillie Gifford pre-let at Haymarket is a major vote of confidence in Edinburgh and there are signs that the wider market is beginning to thaw as well, with deals approaching conclusion and new viewings taking place within government guidelines.
“Many of the live requirements that were issued before lockdown were paused, rather than abandoned altogether, and there are tentative signs that many of them will begin to progress again. We have even seen some occupiers rekindle deals that were shelved during the height of the pandemic, as they begin to take a more positive stance.
“Of course, the situation is continually evolving but, as businesses begin to look at returning to the workplace, there are reasons to feel positive. It is, nevertheless, more important than ever that landlords and occupiers collaborate and regularly communicate as they adjust to new working patterns and operating models, with flexibility particularly important in helping both parties manage the challenges that lie ahead.”
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