Edinburgh office tenants ‘stay put’ and renegotiate terms of existing leases amid booming demand for premises

Edinburgh’s office market saw a record number of regears – the renegotiation of ongoing leases – last year as occupiers decided to stay put amid economic uncertainty, according to new analysis from Knight Frank.

The independent commercial property consultancy found that about 495,000 square feet of office space was involved in regears in 2022, up from the 158,900 recorded the previous year, with more than a quarter of these deals involving professional services firms, and 23 per cent re-let to public sector organisations.

Knight Frank also pointed out that just under 550,000 sq ft of new city centre office space was taken up last year, slightly down on the 577,532 let during 2021, and boosted by Blackrock securing about 140,000 sq ft at 20 Brandon Street in the biggest deal of the fourth quarter. Supply of all space is expected to remain limited, with 76 per cent of the 370,000 sq ft scheduled to be delivered in 2023 already secured by occupiers.

Toby Withall, office agency partner at Knight Frank Edinburgh, said: “Availability will be a challenge for the year ahead, with a particular lack of good quality, small to medium-sized Grade A suites. In turn, this could push rents higher for the best available space.”

Knight Frank has found that about 495,000 square feet of office space was involved in regears last year, up from the 158,900 recorded in 2021. Picture: contributed.

The consultancy has predicted that the continuing supply-demand imbalance, and a vacancy rate of less than 1 per cent for new-build grade A space, could push Edinburgh’s headline rent north of £42.50 per sq ft early in 2023. Occupiers "need to plan ahead and act quickly if they want to secure the quality of space they are looking for, with some having to consider out-of-town accommodation”, Mr Withall added.