SCOTLAND’S office vacancy rate has risen to 10.3%, the highest level in seven years, as occupiers continue to reassess their space needs, according to CoStar Group, a leading provider of online real estate marketplaces, information and analytics.
The amount of unoccupied office space across the country stands at 10.9 million square feet, up from 9.2 million square feet a year ago and 7.2 million square feet in March 2020.
The vacancy rate when the COVID-19 pandemic struck was 6.9%.
In the 12 months to March 2023, tenants released 1.3 million square feet back on to the market, while developers delivered around 400,000 square feet of new offices.
Since the pandemic began, net absorption of office space across Scotland – a measure of demand that counts office space vacated as well as occupied – has been negative by 2.7 million square feet.
Grant Lonsdale, CoStar Group’s director of market analytics in Glasgow commented:
“While the headline figures make for a sobering read, our data shows a mixed picture by building grade, age and location.
“Broadly speaking, firms are gravitating towards the newest and best offices, whether they are based in Edinburgh, Aberdeen, Stirling or elsewhere.
“Demand for the highest-quality 5 Star-rated buildings as well as those built in the last decade remains positive. However, we are seeing the opposite in lower-rated buildings from previous development cycles.
“Hence, developers are refurbishing or redeveloping older properties to meet tenants’ post-pandemic needs in terms of wellness and sustainability.
“Demand for refurbished or redeveloped office space will be key to restoring an element of balance in major office clusters like central Glasgow and west Edinburgh where vacancy rates are north of 15%.”