Scottish offices retain appeal for occupiers and investors
Latest JLL research indicates Scottish cities will continue to attract corporates and capital
In its latest research JLL has outlined how offices in Scotland’s main cities will adapt and change as we emerge from Covid-19 and how both the occupational and investment market will recover due to their inherent fundamentals and lack of oversupply.
JLL cited a stable vacancy rate in both Edinburgh and Glasgow which are amongst the lowest of the UK’s key regional cities – currently standing at 3.0% and 4.4% respectively. Both cities are also experiencing a keen lack of Grade A stock and ongoing speculative construction is particularly low, ensuring that they will be somewhat insulated against economic shocks compared to previous downturns when oversupply was more prevalent.
Cameron Stott, lead director in Edinburgh at JLL, said: “Positive sentiment is returning to both Edinburgh and Glasgow’s leasing markets. Large occupiers seeking pre-lets, often with long lead times, continue to actively pursue space and new enquiries are being launched with virtual viewings taking place. We anticipate that a number of occupiers will adapt their requirements, in-line with the changes we foresee taking place around the office layout, and that transactions will take longer but the key office markets in Scotland are moving forward.”
According to JLL the purpose of the office will be reimagined and it will be essential in encouraging collaboration, innovation, mentoring and team building – all things that technology struggles to replicate and cannot easily be done at home. Density requirements will change and there will be an evolution in how office space is used, designed and developed as the workforce moves into the ‘next normal’.
JLL predicted that defensive investment strategies will be adopted by investors seeking to deploy capital into Scotland’s main cities but that both Edinburgh and Glasgow continue to offer considerable value compared with many European cities.
Alasdair Humphery, head of Scotland at JLL, said: “Scottish real estate will retain its long term appeal and we expect conditions to improve towards the end of the year and into 2021. The significant yield compression seen in some parts of Europe has created a notable gap between these and UK cities and has caused many European and global investors look to cities like Edinburgh and Glasgow in the search for yield. Covid-19 has clearly led to investors adopting a more cautious approach and the inability to travel has delayed decisions, but we expect Scotland to retain its far-reaching appeal to those seeking attractive returns.”
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $18.0 billion, operations in over 80 countries and a global workforce of more than 94,000 as of March 31, 2020. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.