Scotland’s office market enjoyed an “encouraging” performance last year despite ongoing political uncertainty, a new report indicates.
The office sector proved resilient in 2019, with Glasgow and Aberdeen enjoying a flurry of activity in the final months, according to a fresh snapshot of the sector from property adviser CBRE.
Glasgow saw the highest take-up of office space by a significant margin, as activity in Scotland’s largest city rose 12.2 per cent in the fourth quarter, bringing the yearly total to more than 856,410 square foot.
Among the notable deals was an additional 48,700 sq ft taken by Virgin Money at the under-construction 177 Bothwell Street, where landlord HFD Group’s serviced office business Opus has also taken more than 65,000 sq ft.
CBRE anticipated a “very optimistic” year ahead for the city, with demand from tenants set to remain high.
Aberdeen also enjoyed a healthy end to the year which drove take-up to its highest level since 2014. This represents a 42.4 per cent surge from 2018, and a 34.4 per cent increase on the five-year average.
Significant transactions included the 51,000 sq ft taken by engineering firm Oceaneering at Aberdeen International Business Park in September, which represented the largest office deal in Aberdeen since 2015. This was later surpassed in Q4 with the 76,620 sq ft taken by Taqa at Prime Four in Kingswells.
'Critically low' supply
Meanwhile Edinburgh saw a much slower final quarter, resulting in total office take-up for 2019 of 603,000 sq ft – a drop of almost 30 per cent compared to the five-year average.
The property adviser expects the capital’s “critically low” availability and restricted pipeline of Grade A supply to lead to further “regears”, with tenants renegotiating the terms of their lease.
Stewart Taylor, senior director at CBRE in Edinburgh, said: “Despite a backdrop of uncertainty, the Scottish market proved resilient across the three principal cities in 2019.
“The Glasgow market has continued to tighten with significant pre-lets underlining the increasing importance of real estate in attracting and retaining employees.
“The Aberdeen market is now on an upward cycle and while take-up was down in Edinburgh from a ten-year high, we anticipate that the lack of a development pipeline of any significance will lead to further pre-lets as occupiers secure the remaining Grade A space.
“Take-up of Grade A accommodation in Edinburgh remained high at 40 per cent of total take-up, further underlining the drive to quality.
“The economic outlook for the capital remains positive, with the city’s population forecast to grow at almost double the UK average over the next decade.”