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Edinburgh, 17 January 2014 - Edinburgh’s office property market is set to show further improvement in 2014, according to the latest round up of activity from professional service and investment management specialists Jones Lang LaSalle. Office occupier take up amounted to a total 773,000 sq ft in 2013, a figure that sits ahead of both five and ten year averages, and shows an 8% increase on 2012.
Trends for 2014
Jones Lang LaSalle has identified two major themes for the year ahead. Access to transport will continue to be key, with occupiers focusing on destinations that make it easy for their employees to travel. Hot spots will emerge around transportation hubs including Haymarket, Waverley and the re-emergence of Edinburgh Park, due to the long awaited arrival of Edinburgh’s tram system.
Refurbished property will continue to remain in strong demand. 2013 witnessed a significant proportion of lettings from refurbished accommodation and this is set to continue over the year ahead. Whilst tenants still have a choice when looking at budget accommodation and the ability to discount unrefurbished space, the popularity of refurbished office accommodation is set continue well into 2014.
Occupier activity in 2013
Strong take-up during 2013 was assisted by a number of key City Centre and West Edinburgh deals, including lettings to PwC and The Green Investment Bank at Atria One, Morrison Street and The Bank of New York Mellon at Capital House, Festival Square. To the West of the city, lettings by Sainsbury’s Bank and JLT marked the resurgence of Edinburgh Park, with take up levels equivalent to those last seen in 2001. Jones Lang LaSalle was involved in all five deals.
Ben Reed, Director, Office Agency at Jones Lang LaSalle in Scotland said: “Last year marked a revival of sorts for Edinburgh’s office market, with the highest take-up witnessed since before the financial crisis. Several factors contributed to this upturn, including a number of high profile City Centre deals and a resurgence in activity in West Edinburgh leading to take-up levels last seen in 2001.
“We believe a lack of existing opportunities over 30,000 sq ft will lead to pre-lets in 2014, as we start to see some of the bigger city centre schemes moving forward – where we anticipate development starting at Haymarket, Caltongate, St Andrew Square and Quartermile. Edinburgh already has the lowest vacancy rate of the major regional cities. However, we are expecting the vacancy rate for offices in Edinburgh to fall below 6% by the end of 2014, with rates for Grade A offices, in particular, reaching critical levels. This may limit potential inward relocation due to lack of stock.”
Commenting on Edinburgh’s development market, Cameron Stott, Director, Office Agency at Jones Lang LaSalle in Scotland said: “We are advising development clients to deliver more sustainable offices which are capable of greater occupancy densities in the next cycle, reflecting occupier demands. With an ever increasing premium placed by occupiers on transportation links, the key hot spots will be around transportation hubs including Haymarket, Waverley and the re-emergence of Edinburgh Park.”
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