Office take up in Edinburgh is set for another record-breaking year according to new research by services and investment manager Jones Lang LaSalle (JLL).
In total, 193,000 sq ft was transacted in the Scottish capital between July and September, up more than 30 per cent on the same period last year. Occupier take up for 2015 so far now stands at 605,000 sq ft.
And JLL — involved in 27 per cent of the Scottish city’s transacted space — predicts activity levels will continue at the same pace for the final months of 2015, claiming “the year-end take-up is expected to be well above the five and 10 year average”.
If those figures are reached Edinburgh office take up will outstrip 2014 returns — the highest in over a decade. “The market is very buoyant and we’re seeing more good sized requirements in the capital than we’ve seen for some time,” commented Geoff Scott, an associate director at JLL.
There were a total of 53 deals during the third quarter, taking the January to September tally to 156. Transactions between July and September were predominantly made up of smaller deals, with an average contract size of 3,791 sq ft.
The most notable transactions were the pre-let of 58,567 sq ft to FanDuel the fantasy sports company at Quartermile Four, due for completion by mid-2016; the sale of 40-44 Drumsheugh Gardens to Square & Crescent, for residential conversion; and the letting of 11,799 sq ft at Cornerstone, on South Gyle Business Park, to the engineering consultancy Blyth & Blyth.
JLL reports there were no new development completions and the supply of Grade A space continues to fall, reducing by 7.6 per cent, with the overall vacancy across the city now at 5.1 per cent.
“The development pipeline is becoming severely constricted with the next development completion — 128,600 sq ft at Quartermile Four — already pre-let to FanDuel and with strong interest already registered for the remainding space,” said Scott, who added that prime quoting rents remain at £30 per sq ft for existing stock and in excess of £30 for pre-lets.
“We expect further pre-letting activity to be announced before the year end which will continue into 2016,” went on the JLL associate director. “The shortage of available supply and the timing of new completions may prove problematic for occupiers who do not have a strategy in place. In the city centre especially, supply is severely constrained.
“This message is now being heard and we are seeing some occupiers with relatively distant expiries start to take action.
“The shortage of supply in the city centre should also result in more activity in west Edinburgh, aided by the new tram system which has proved a major boost.
“If activity continues at the expected rate,” he concluded, “we could well see an even better result than 2014, which set a 10 year high for office transactions in Edinburgh.”
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