Edinburgh’s office property market - what’s hot and what’s not in 2025

Edinburgh’s office market enjoyed a healthy start to the year, two new studies would suggest, though the outlook for the remainder of 2025 remains cloudy.

Office take-up in the capital rose more than 25 per cent year-on-year during the first quarter of 2025, according to Knight Frank’s latest data. The commercial property consultancy’s analysis found that there was 92,182 square feet of city centre office take-up during the three-month period, compared with 72,296 sq ft in the first quarter of 2024.

There were 33 deals in the latest quarter, compared to 26 in the opening three months of last year - with the IT and telecommunications and professional sectors the most active, each accounting for 15 per cent of the overall space transacted.

Edinburgh is the focus of two new reports on the state of the city's office market.

The number of regears - occupiers renewing their leases - fell to 22,849 sq ft across Edinburgh city centre in the first quarter of 2025. By recent comparison, during the second quarter of 2024 renewals hit a high of 135,013 sq ft.

Property experts noted that availability in the city centre remained “highly constricted”, with a vacancy rate of just 0.37 per cent for new high-quality, Grade A space and 6.67 per cent for all property grades. There is no new or refurbished space set to be delivered in the next couple of years - although 882,000 sq ft of refurbished accommodation could join the development pipeline in the medium term.

Toby Withall, office agency partner at Knight Frank Edinburgh, said: “Edinburgh’s office market has posted a healthy quarter, despite the well-publicised challenges many businesses currently face. Supply remains constrained and there is little coming through imminently to absorb occupier demand, which remains relatively resilient.

“One dynamic we could see this year is a delayed effect of Covid-19. It is five years since the pandemic brought a halt to the market and lease terms were put on hold or extended for shorter than usual periods of time. Most occupiers commit to ten-year leases with a break at year five, which will mean there are fewer expiring this year.

The tech sector was one of the most active in terms of driving new office lettings.

“While that may subdue the market in the remainder of 2025, along with the impact of an uncertain macroeconomic and geopolitical backdrop, there are good reasons to be optimistic longer term,” he added. “Prime rents are rising amid a restricted development pipeline, and occupiers continue to seek out quality space that aligns with their wider business objectives.”

The Knight Frank report coincides with fellow consultancy JLL’s snapshot of the first quarter. It found that office take-up across Edinburgh was steady as occupiers continued to navigate an “increasingly competitive marketplace”.

The latest JLL research calculates that just under 140,000 sq ft of space was transacted across Edinburgh in the first three months of the year - which it noted was in line with the five-year average for the same time period. The headline numbers tend to vary between property agencies depending on the deals that are examined, methods of calculation and the geographical spread.

JLL also noted that just 20,000 sq ft of regears were completed in the first quarter – a similar figure to Knight Frank, and in marked contrast to previous quarters, where regears made up a large proportion of activity as tenants “sought to negate uncertain market conditions” by renegotiating their existing terms.

There were no deals over 10,000 sq ft concluded during the quarter, where typically JLL would expect to see between three and five deals reaching this size bracket. However, a number of notable deals did complete, including Tetra Tech taking space in Quay 2 of Fountainbridge and BDO taking a floor in the redeveloped 30 Semple Street scheme.

JLL is expecting activity to pick up during the course of the second quarter, with several larger transactions under offer. There have been three recent completions which have already seen letting activity - 30 Semple St, New Clarendon and 24 St Andrew Square. With the conclusion of these projects “the pipeline runs dry”, the firm added, echoing Knight Frank’s observations, as no other major developments are on the horizon.

Without a guaranteed supply pipeline, JLL argues, there is evidence that some tenants are planning far ahead, evaluating their options as early as five to six years before their leases expire. It believes that this “forward-thinking approach” is likely to create pre-letting activity, which would trigger the next phase of significant office development.

Sara Dudgeon, associate at JLL in Edinburgh, said: “Edinburgh businesses will be well acquainted with the ongoing shortage of prime office space - and as we look ahead to the rest of the year, all signs indicate that this will only persist. In this environment, occupiers that move quickly and, in some cases quietly, are best placed to secure a favourable deal for their business.

“Given high-quality space is a scarcity, anything that becomes available will continue to see the most demand and shorter voids. In the current operating environment of sticky inflation and higher business costs, driven in part by the increased burden of employers’ national insurance contributions, it’s important that businesses factor this in when devising occupational strategies for the years ahead.”

Last month it emerged that one of Edinburgh’s largest office buildings, that was built for Royal Bank of Scotland in the late 1990s, had changed hands. Scarborough Group International (SGI), the property regeneration specialist, said it had acquired the former Younger Building at South Gyle to the west of the city from a client of OakNorth Bank.

The 89,863-square-foot building was constructed in 1999 for RBS/NatWest Group. Now vacant, it is said to offer a “prime opportunity for redevelopment into a modern, high-quality workspace that aligns with the evolving needs of today’s occupiers” while addressing the city’s ongoing shortage of high-quality Grade A office space.

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