Edinburgh office take-up on track to beat 2016 total

Edinburgh’s office market looks set for another very strong year after a further 160,449 sq. ft. of city-centre stock was let during Q3 2017, according to commercial property consultants Knight Frank.

Analysis from the independent property consultancy found that the figure was up nearly two-thirds (61.2 per cent) on the 99,512 sq. ft. registered during the same period last year.

It also compared against 415,698 sq. ft. in Q2 2017, which was the highest quarterly total on record. This was largely driven by the Government Property Unit’s acquisition of around 190,000 sq. ft. at New Waverley – the biggest office deal in the city for longer than two decades.

More than two-thirds (69.4 per cent) of the activity between July and September 2017 was transacted by financial services companies, with a further 11% acquired by the technology, media, and telecommunications (TMT) sector.

The latest quarter of activity takes the total take-up in Edinburgh city centre to 700,822 sq. ft., of which 576,549 sq. ft. was Grade A space. Last year saw a total 760,000 sq. ft. let in the city centre, placing the city on the cusp of surpassing this figure in the final quarter of 2017.

Simon Capaldi, office agency partner at Knight Frank, said: “The market has hit the ground running after the usual summer break – it’s placed Edinburgh in a great position to outdo last year’s solid performance. Take-up has been strong throughout the year and looks set to remain so, with plenty of deals likely to conclude in the fourth quarter.

“At the beginning of the year, we predicted a ‘perfect storm’ was going to hit Edinburgh’s office market, and it appears to be drawing ever closer. The best space is quickly filling up and that’s now filtering down to the older and refurbished properties on the market, which are attracting interest we haven’t seen for some time.

“On the supply side, businesses will have to wait 12-18 months for new Grade A space and there’s only enough stock in the city centre to get us through the next 22 months – assuming 105,000 sq. ft. of new stock becomes available in 2018 and there are no pre-let agreements.”

Edinburgh Park’s 3 Lochside Way has enjoyed significant occupier demand following its acquisition by Drum Income Plus REIT and the completion of an £80,000 refurbishment project.

The office building, marketed by joint agents Knight Frank and JLL, has secured new tenants for around 10,000 sq. ft. within the last 10 months, with only one 3,900 sq. ft. ground floor suite remaining.

The recently refurbished common areas have had a positive response from the building’s new occupiers, which include biotechnology firm, NuCana; fleet management company, Gofor Finance; and the legal arm of estate agency, Coulters.

Located in a prominent position on the popular business park in the west of Edinburgh, 3 Lochside Way has strong public transport links with two railway stations and the capital’s tram system servicing the area.

Mr Capaldi said: “3 Lochside Way has been a real success story since the conclusion of substantial refurbishment works to the building’s common areas.

“3 Lochside way is close to being fully let, with only 3,900 sq. ft. of space available. The last remaining ground floor suite is already generating encouraging levels of interest, as occupiers seek high quality facilities readily accessible to the city centre via the tram, bus and rail services at Edinburgh Park.”

Bryan Sherriff, Investment Advisor at Drum Income Plus REIT, added: “Following renovation, 3 Lochside Way offers first-class, flexible office accommodation. Edinburgh Park and the west of Edinburgh are attractive locations for occupiers due to the improved transport infrastructure and increased choice for tenants. The significant demand for our recent investment is a perfect example of this trend.”