BUSINESSES seeking new offices in Edinburgh may be forced look outside the city centre due to a dearth of modern space.
Figures from Knight Frank show that in the first quarter of this year 460,000 square feet was required in Edinburgh by companies looking to lease space . However, while demand is high, the take-up of office space in the quarter fell to 146,963 from 203,000 in the same period last year.
Knight Frank said this showed the actual deals being struck did not “reflect the true picture” of a buoyant market.
Like Glasgow, there is a lack of Grade A space in the capital, and while there is a strong pipeline, concerns are mounting that until these properties are ready, businesses requiring space will have to look elsewhere.
“Businesses need to think carefully about their next move, and may be forced to consider outside of the core city centre due to a lack of modern, open-plan space and rising costs,” said Simon Capaldi, office agency partner at Knight Frank.
“We’ve recently observed an increase in companies looking at areas such as the west of Edinburgh, which can potentially provide Grade A offices to meet their requirements, albeit further afield.”
Mr Capaldi said there was a particular appetite for office accommodation around the 5,700 sq ft mark, while the average requirement has also increased by approximately 1,000 sq ft compared to the first quarter of 2017.
“With city centre Grade A availability currently sitting at 275,000 sq ft, there’s a clear shortfall if the city is to meet the current occupier demand,” he said.
“There is an encouraging development pipeline but most of the space currently under construction is likely to be pre-let in part, or whole, by completion, leaving limited options for occupiers currently searching for Grade A accommodation.”
In a separate report, another property consultancy, CBRE, said the Edinburgh office market has experienced a challenging start to 2018.
“In terms of occupier trends, the tech sector continues to rival the traditional financial services industry as being the main source of take-up in the city,” said Allan Matthews, a director in the advisory & transaction services team at CBRE.
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