Edinburgh’s office market survives 'unprecedented' 2020 but latest lockdown could prove a drag
Take-up of office space in the past 12 months totalled nearly 500,000 square feet with demand remaining strong, according to analysis from property adviser Knight Frank.
The firm found that 490,585 sq ft of was transacted over the year, despite the “unprecedented” events brought about by Covid-19 and subsequent lockdown measures which have seen millions switch to working from home. The figure compares to some 650,000 sq ft in 2019 – a drop of almost a quarter.
Investment manager Baillie Gifford’s 280,000 sq ft pre-let at The Haymarket – announced in July – provided a significant boost for the city.
A new headline rent of £37.50 per sq ft was also set for the city centre despite the uncertain backdrop, rising from £35.50 in 2019.
Knight Frank said that rents had generally remained steady, with anticipated downward pressure from “grey” space – previously occupied accommodation re-introduced to the market – yet to materialise.
Toby Withall, office agency partner in the firm’s Edinburgh operation, said: “Edinburgh’s office market has performed remarkably well considering the wider economic context and lockdown restrictions of 2020.
“While the great work-from-home experiment that took place last year has accelerated some workplace trends by ten years, it has also underlined the enduring role that offices have to play, as a place for people to collaborate, socialise, and educate.
“That said, landlords may find that while there is still strong demand, occupier requirements have evolved, and they are looking for more from their space.
He added: “The introduction of another lockdown will likely have a significant impact on the first quarter of 2021.
“However, all things being equal, we expect this will push pent-up activity back to the second and third quarters of the year, rather than result in fundamental changes to the need for property.
“Regardless, occupiers delaying decisions too long into 2021 may find themselves with a narrower set of options to choose from.”
Meanwhile, Edinburgh’s development pipeline has also remained “severely restricted”, the firm noted, with just 281,000 sq ft of new space under construction.
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