Edinburgh office market ‘moving in a positive direction’ despite lack of high-end supply, says Knight Frank

Edinburgh’s office market is “moving in a positive direction”, despite a dip in take-up during the summer, as more organisations favour having a hub for staff following the pandemic, according to a new report.

Take-up of office space in Edinburgh city centre for 2023 so far has reached about 431,400 sq ft, according to Knight Frank. Picture: contributed.

Independent commercial property consultancy Knight Frank has found that there was about 103,400 square feet of office space taken up in the centre of the Scottish capital during the third quarter of 2023 – down just under 15 per cent year on year. The total for 2023 so far has reached about 431,400 sq ft, with another 331,500 sq ft of requirements still on the market.

The firm added that there is currently no new grade A space available for occupiers in the city centre, with 30 Semple Street – expected to be Edinburgh’s greenest office building – the only grade A scheme currently on site and not set to complete until the third quarter of 2024.

Knight Frank also reported a busy period for the energy, and technology, media, and telecommunications (TMT) sectors, representing 30 per cent and 17 per cent of activity respectively. Energy company Enoda secured more than 14,600 sq ft at Quartermile 3, while software-developer Addepar took just under 10,000 sq ft at Quartermile 1 in two of the biggest deals of the quarter.

Simon Capaldi, office agency partner at Knight Frank Edinburgh, said: “Occupiers are starting to understand that there is a real need for some form of office space post pandemic. At the same time, they are looking to use it in a different way – for example, having more collaboration space or using their space as a city-centre hub.

“The flight to quality continues, with the focus for most occupiers on securing best-in-class space with strong [environmental, social, and governance] credentials. There is a strong desire from occupiers to move and complete their leases quickly, which is driving demand for fitted space that can reduce lead-in times and initial [capital expenditure] outlay.

“However, the limiting factor for leasing activity in the city is the availability of good quality space. A real bottleneck of high-standard supply is emerging – occupiers will have to wait for the completion of new developments such as New Clarendon on George Street and 30 Semple Street to get the kind of space they are increasingly looking for.”