Edinburgh's office take-up shrugs off Brexit uncertainty

Edinburgh could experience another 'strong' year in take-up of office space after a resilient third quarter and despite uncertainty in the aftermath of the Brexit vote, new data from property consultancy Knight Frank has revealed.

Activity continued to be driven by firms in technology, media, and telecommunications, which accounted for about 40 per cent of the total. Picture: TSPL

It found that a total of 120,000 square feet was let across the Scottish capital from July to September, down on the first two quarters, but roughly in line with the 148,000 sq ft in the same quarter of 2015.

Activity continued to be driven by firms in technology, media, and telecommunications, which accounted for about 40 per cent of the total, while demand for Grade A space in the city centre remained “voracious”, with 176,000 sq ft already let this year, putting the Scottish capital on course to outperform the 220,000 sq ft ten-year average for annual city centre, Grade A office take-up by the end of the year.

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Simon Capaldi, associate at Knight Frank, said that while the third quarter tends to be the slowest period in the year, “if all the deals currently in legals and under offer conclude, we could be looking at another strong year for Edinburgh – approaching the 800,000 sq ft mark and well above the ten-year average.

“To have two strong years back to back shows the level of confidence that is pumping through the city,” he added, also highlighting unquenchable demand for Grade A stock continuing and availability dropping as supply fails to keep pace. “This trend looks likely to continue, with only one speculative development currently under way in Edinburgh and little else in the pipeline. The level of demand should give developers the confidence to start building.

“Many will be holding out for pre-let opportunities and, although there have been few in the last decade, we’d expect to see more announced towards the end of 2016.”

Meanwhile, figures announced today show that the UK’s appeal as a destination for cross-border M&A has dropped amid Brexit uncertainty and despite the weak pound serving as an incentive to overseas buyers.

Accountancy giant EY found that for the first time in its Global Capital Confidence Barometer’s seven-year history, the UK has fallen out of the top five global M&A destinations.

Ally Scott, EY partner and head of transaction advisory services in Scotland, said: “Brexit may not have created the initial economic turmoil some feared, but investment uncertainty is clouding the UK’s longer-term economic prospects.” That said, 62 per cent of executives surveyed are still positive about their UK operations. Scott added: “The UK’s strong fundamentals mean that companies don’t look ready to run for the exit.”

Also positive was a separate study published today by Barclays, which found that despite Brexit, 78 per cent of world business leaders think Britain is a good place to start a business while 60 per cent said the vote to leave Europe will improve their trade dealings with British firms.