Constrained market supply drives continued growth in Edinburgh prime rents

30 Semple Street

THE LACK of prime Grade A office accommodation in Edinburgh is driving an uplift in rents for quality space across the market, according to property consultancy Cushman & Wakefield. 

The market delivered solid take-up in Q1 2024 totalling 209,000 sq ft. The letting of 103,000 sq ft at 1 Lochside View in West Edinburgh to workspace provider Edinburgh Palette accounted for nearly half of all take-up. Key prime office deals included the pre-letting of 14,680 sq ft on the fifth and sixth floors at 30 Semple Street by Hymans Robertson and GE Vernova, acquiring 9,464 sq ft at 1 New Park Square, Edinburgh Park. 1 New Park Square is now 65% let following three further deals in 2023. 

Supply continues to be a real challenge, with 24 St Andrew Square (48,000 sq ft) and 30 Semple Street (57,000 sq ft) the only prime Grade A office schemes currently onsite. The lack of quality stock coupled with strong tenant demand has seen prime headline rents in the city centre increase to £45.00 per sq ft (12.5% year on year growth) with prime rents in the non-city centre market increasing to £30.00 per sq ft (20% year on year growth). 

A challenging office development landscape and the underlying alternative use value for buildings in Edinburgh has led to potential development stock being removed from the pipeline, exacerbating the constrained supply position. Edinburgh One at 60 Morrison Street was earmarked for 85,000 sq ft of prime Grade A offices, however, it was recently purchased by McAleer & Rushe for hotel redevelopment. This follows the 2023 purchases of existing significant office buildings at 28 St Andrew Square (by Dalata Group) and 9-10 St Andrew Square (by Tristan Capital Partners), with the intention of conversion to hotel use. 

Demand levels remain very strong in the market with 97 occupier requirements totalling 1.06 million sq ft. This includes 306,000 sq ft of new requirements since the beginning of 2024. 

Commenting on these figures Adam Watt, Associate Director at Cushman & Wakefield said: “We continue to see a competitive landscape in the Edinburgh office market as occupiers vie for the best available space for their talent. 

“The office remains central to many businesses as a hub for collaboration and interaction and with limited prime Grade A options available and a constrained development pipeline, occupiers are having to enter the market well in advance of their lease expiry date. Pre-lets will be required to deliver the development stock not currently onsite, so early engagement from occupiers with landlords is critical in unlocking these opportunities.”

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