2010 saw total office take-up in Edinburgh reach its highest level for three years, according to figures released by Jones Lang LaSalle.
Last year’s occupier take-up amounted to approximately 730,000 sq ft in 183 deals throughout the City, according to Jones Lang LaSalle’s research, representing a 38 per cent uplift on 2009.
Office take-up figures for 2008 – 2010:
2010: 730,000 sq ft
2009: 530,000 sq ft
2008: 700,000 sq ft
As in 2009, there were no speculative completions within the city centre. They said the lack of development had resulted in a decrease in the supply of Grade A space by over 24 per cent since the end of 2009, leaving just two and a half years available supply based on current take up levels.
Site HI, which will consist of 186,500 sq ft of new Grade A offices in the city centre, is not due for completion until December 2012, which means that it will be two years before any new stock becomes available.
They said diminishing availability of office space has resulted in a marginal decrease in vacancy rates from 9 per cent in 2009 to 8 per cent. This compares favourably to other centres; Glasgow, Leeds & Manchester is 10 per cent and Birmingham is currently 19 per cent.
Cameron Stott, Director of Office Agency at Jones Lang LaSalle said: “Office take-up for 2010 was significantly better than had been anticipated reflecting well on the resilience of the Edinburgh economy. There was notable activity in the finance sector with Tesco Finance and Baillie Gifford expanding whilst other financial occupiers such as Virgin Money are still actively seeking new accommodation. Edinburgh has also become more competitive and in this respect has attracted some new occupiers including Glenmorangie, H&M and Craneware.”
“The market in 2010 remained tenant driven. There was an abundance of supply and landlords had to remain flexible in order to secure deals. As a result, tenants could still demand generous incentives to relocate or renegotiate terms with existing landlords.”
Ben Reed, Director commented: “Whilst we are anticipating these challenging market conditions to continue into the start of 2011, especially as the full effect of budget cuts start to take hold, occupiers should be aware that the development pipeline has been turned off for over a year and the overall supply of office space has diminished, especially the better quality space. Towards the end of 2011 we are predicting a period of undersupply, especially within the city centre which will ultimately impact on rents and incentives offered.”
Prime quoting rents in Edinburgh currently stand at £27.50 per sq ft compared to other regional cities such as Manchester and Birmingham, where rents are £28.50 per sq ft and £28 per sq ft respectively and Glasgow at £26.00 per sq ft.