PENT-UP demand for quality office space in Edinburgh led to a resurgence of take-up in the third quarter, new analysis has shown.
Property firm Knight Frank declared the Edinburgh office market had defied the economic gloom as 121,236 square feet of office space was taken up in the city centre between July and September. This represented a “strong bounce-back” from the 50,834 sq ft taken up in quarter two, and compares with 121,403 sq ft in the same quarter last year.
Knight Frank observed that take-up is traditionally lower in the summer months because of holidays but declared there is a “significant amount of pent-up demand” for space coming on to the market further to the pandemic.
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The largest transaction in the third quarter saw law firm Anderson Strathern secure 21,446 sq at Capital Square on a 15-year lease.
The supply of Grade A space continued to dwindle because of strong demand over the period. But more “grey space”, where tenants sub-let unused space, started coming on the market, Knight Frank noted.
Simon Capaldi, office agency partner at Knight Frank Edinburgh, said: “The demand for quality office space that built up during the pandemic has begun to filter through into deals, despite the well-publicised wider economic challenges we have faced this year. That could see Edinburgh move closer to the 10-year average for take-up this year, following the slump caused by Covid-19.
“We are, however, beginning to see more grey space becoming available in the market – space at 81 George Street and The Haymarket has recently gone on the market with the current occupiers re-sizing their office footprint. We expect more grey space to follow over the next few months, but with demand so high and space comparatively limited, it is unlikely to have a material impact.
“Occupiers are increasingly putting pressure on landlords to push forward with proposed refurbishment plans ahead of entry in 2023. We have also seen a rise in demand for ‘plug and play’ office options, where tenants can move in quickly without the hassle of large capital expenditure to fit-out the space.”
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