ACCORDING to the latest research from Savills, take-up in Edinburgh city centre in the first three quarters of 2020 totalled 395,585 sq ft. This was almost 30% up on the same period last year, albeit take up has been fundamentally underpinned by the 280,000 sq ft pre-let at M&G’s Haymarket that completed in Q3 As a result, despite the number of deals recorded in Edinburgh in 2020 (Q1-Q3) being less than half that of 2019, Edinburgh is the only UK regional office market that has seen take-up in Q1-Q3 2020 exceed that of 2019.
Savills says that between Q1-Q3 2020 the Insurance and Financial Services sector accounted for over 75% of Edinburgh’s office take-up with other notable deals including: Cadence taking 8,500 sq ft of Grade A space at 40 Princess Street; Forecast Financial committing to 4,300 sq ft at Nova House; and Handelsbanken signing on 3,600 sq ft at Waverly Gate.
Mike Irvine, director in the office agency team at Savills in Edinburgh, comments: “Despite the disruption to the market caused by the ongoing Covid-19 pandemic, those deals that are happening demonstrate confidence in Edinburgh’s city centre office market that will ride out the current uncertainty.”
Supply of Grade A/ B accommodation in Edinburgh city centre remains limited, at just 647,000 sq ft, of which 396,000 sq ft is Grade A.
Mike continues: “The more relevant metric is the supply of “prime” office accommodation of which there is less than 200,000 sq ft currently available, with limited development pipeline. It is this prime accommodation that is tailored to the needs of occupiers moving forwards and it is this section of the market that is likely to see the highest potential for rental growth”.
The firm reports prime Grade A rents are in excess of £3550 per sq ft.
Office investment in Edinburgh totalled £210 million between Q1-Q3 2020, which Savills reports is slightly ahead of the long term average for this period (£205 million). The firm says 85% of this investment came from overseas investors, demonstrating strong international confidence in both Edinburgh’s office market and wider economy.