While in Glasgow 2016 is already being dubbed the "year of the refurbishment", Edinburgh is building on its bumper 10-year high in office take-up and could see as many as five new schemes start to move forward.

In the west, most of the planned speculative office development projects with planning consent, including BAM Properties/Taylor Clark’s Atlantic Square and Titan at Broadway Two, are waiting on some potential occupier to sign up for a pre-letting which would give financial backers the mettle to press the go button.

Given the long lead time of up to two years for a new office tower, and the three from the last development cycle rapidly filling up, this is becoming quite serious, as the big inward investors will look first to new build Grade A or look elsewhere.

In the capital, where office take-up reached 924,136 sq ft last year, the highest total since 2014, CBRE say that their current supply shortage and the increasing weight of occupier demand is encouraging developer confidence.

The 122,000 sq ft Capital Square, funded by Hermes Real Estate, 2 Semple Street (37,500) funded by GSS Properties, and Quartermile 3 (74,000), funded by M&G, will be followed by Chris Stewart Group’s The Mint building (60,000) and Interserve and Tiger Developments’ first building at The Haymarket (91,000).

Prime rents in Edinburgh increased to £31 per sq ft last year and are predicted by the advisers to keep rising across all levels, including Grade B space, due to lack of quality secondary buildings.

Incentives didn’t move much in 2015, although they are thought likely to become common in the months ahead.

CBRE senior director Stewart Taylor said: "The pre-letting of all 128,600 sq ft at Quartermile 4, three months ahead of practical completion – a record for the city – is a significant milestone in the current development cycle.

"Fanduel took 58,500 sq ft and Cirrus Logic the remainder.

"It will place further pressure on occupiers with potential requirements within the next five years to move early and quickly.

"Healthy demand is anticipated, with various lease breaks and expiries falling in the next 36 months and several large live requirements.

"The growth of the technology sector is also likely to influence the specification of the next wave of development."

Glasgow’s office market performed relatively well in 2015, with a total take-up of 562,290 sq ft, six per cent above the five year average, underpinned by strong occupier demand.

KPMG’s 39,700 sq ft signing at St Vincent Plaza was the largest letting.

Prime rents are now standing at £29.50 per sq ft, with the occupier outlook this year described as positive, helped by healthy demand from both indigenous employers and others attracted by the underlying labour dynamics.

No surprise that the office space taken up in Aberdeen declined to 399,290 sq ft, the lowest since 2010, reflecting the weakness of the oil and gas sector.

CBRE MD in the granite city, Derren McRae, reports some occupiers using the opportunity to move to better quality space, helped by new Grade A office schemes reaching completion this year.

In brief

The Herald:

Shepherd gathers his flock The former Hyundai factory at Dunfermline, built at a cost of £200 million but never occupied, is set for a new future as part of a new campus for Fife College.

The plant, bought by developer Shepherd Offshore from Motorola subsidiary Freescale, has been secured by the education body under an option to purchase arrangement.

Bryce Stewart, the Colliers director who structured the deal, said: "This is excellent news for the college and its students.

"The option covers a 20 acre site and 75,000 sq ft high quality office building where their long term needs can be met."

Coinciding with news of the proposed move, house builders Bellway Homes and Persimmon have confirmed their acquisition of a 14.5 acre nearby site to develop 225 houses.

"The latest moves leave 70 acres available for commercial development," said Stewart.

"Halbeath Interchange is the most strategic development site in Fife, and will only be enhanced when the new Queensferry Crossing is opened later this year. We are in discussion with a number of commercial occupiers."

Competitive advantage for Scotland

Changes to commercial stamp duty in England could negatively impact on the number of major deals there and potentially encourage investors north of the Border, according to JLL.

Lead director Alasdair Humphery said: "Introduction of a five per cent rate for commercial properties above £250,000 plays in favour of Scotland’s property market.

"At present, transactions in Scotland above £350,000 face a
4.5 per cent rate, meaning George Osborne’s announcement grants Scotland’s commercial property market a rare competitive edge, which is welcomed at a challenging time in the market."

Kingsway development opportunity

The Herald:

A major redevelopment opportunity is on offer on Dundee’s Kingsway
ring road.

Surveyors Shepherd, acting for Abertay University, is selling the Alloway Halls student residence on the northern outskirts of the city.

The 144 space purpose built student accommodation, constructed in the early 1980s and refurbished in 2013, is arranged in three blocks of six flats on a four-acre site.

The three storey buildings totalling 38,400 sq ft are being offered with vacant possession along with two detached caretaker bungalows.

Shepherd partner Jonathan Reid said the prominent site offered potential for redevelopment and conversion to other uses.
Offers over £500,000 are invited.