Occupancy of office space in Edinburgh increased significantly in 2010

King Sturge report notes 30% increase over 2009

Article posted: 07 Mar 2011

Edinburgh’s office market enjoyed a 30% increase in take-up of office space in 2010 according to a recent report by King Sturge. In what has been described as an unexpectedly good year, the total take-up of office space in Edinburgh was 700,000 sq ft.

Availability at the end of 2010 was estimated at around 2.1m sq ft, suggesting a 10% vacancy rate. Reflecting an absence of new development stock, this figure was slightly lower than in 2009 and there are concerns that 2011 will see a shortage of Grade A space.

Notable transactions in 2010 saw Tesco Bank sign up for 97,500 sq ft at South Gyle Crescent, the NHS take 34,000 sq ft at Waverleygate and Baillie Gifford relocate to 22,400 sq ft at The Cube on Leith Street (pictured).

Despite the squeeze on Grade A accommodation, prime headline rents remain at £28 per sq ft with out-of-town rents also steady at £17 per sq ft.

As for investment in prime property, overseas interest had a positive impact but the secondary market remained flat. Key transactions include Highcross’s £35m acquisition of Waverleygate and CBRE Investors purchase of 7 Castle Street for £14m. Indications that there is little prime product to be offered in 2011 suggest that there will be no rental uplift to drive capital growth.

John Clement of King Sturge Edinburgh commented: “The office market in Edinburgh has performed like an orchestra without a conductor. In 2011, we expect the conductor to turn up. Latterly, there has been an increased in the cumber of corporate enquiries as lease expiries in 2012 draw near. The demand has been missing for 24 months, and hopefully normal service will resume this coming year.”                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

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Posted by Jo