Landmark Edinburgh office buildings sold in major deals totalling £40 million

Two landmark Edinburgh office buildings have changed hands for a combined sum approaching £40 million as investor interest gathers pace.

In separate deals, 7 Castle Street – located on the corner of Princes Street and Castle Street – and Caledonian Exchange in the city’s Exchange district have been acquired by FSX Holdings and Catella APAM, respectively. Property consultancy Knight Frank acted on behalf of the vendors on both deals, with purchasing advice provided by GLJ Property on 7 Castle Street and EYCO on Caledonian Exchange. Knight Frank said investor interest in “core-plus” assets in the city was picking up.

Arranged over six levels, 7 Castle Street provides more than 40,000 square feet of retail and office accommodation on a prominent corner site between Princes Street and Castle Street. Vodafone, CBRE and SSE are among its current occupiers. Situated on Canning Street, Caledonian Exchange consists of 59,710 sq ft of Grade A office space. Its occupiers include legal firm Lindsays LLP and youth information platform Young Scot.

Knight Frank said the two transactions took core-plus office deals in Edinburgh to £100m over the last 12 months, following the sales of Orchard Brae House, Edinburgh Quay 1 and Exchange Tower.

Alasdair Steele, head of Scotland commercial at Knight Frank, said: “The deals for 7 Castle Street and Caledonian Exchange show that investor demand for offices in Edinburgh remains strong, despite a challenging macroeconomic and lending backdrop. 7 Castle Street is a unique asset, facing onto one of the most popular tourist attractions in Europe, while Caledonian Exchange is among the Exchange’s best-known buildings.

“Combined with other recent deals, around £100m of core-plus offices have been sold in Edinburgh during the last year. At a time when the ‘flight to quality’ has been a major trend across the UK, the deals demonstrate the resilience and the depth of investor interest in the city, with prime stock relatively limited and the occupier market remaining strong.”

Scotland’s commercial property market saw investment volumes continue to recover in 2022, despite macro-economic challenges, according to a report by Knight Frank earlier this year. It found that deals worth a collective £1.66 billion concluded last year, marginally up on the £1.64bn recorded during 2021.

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