Edinburgh office take-up jumps while Glasgow remains muted – Savills
Take-up of office space in Edinburgh during the first half of 2012 was more than double the level seen in H2 2011, says Savills in its latest research on the market. Two of the high-profile requirements in the market at the end of last year have come to fruition – Brewin Dolphin has acquired 47,816 sq ft of office space at Atria on Morrison Street and Blackrock has pre-let 79,500 sq ft at Exchange Place One. These deals helped to boost H1 2012 take-up to 404,941 sq ft.
Prospects for the second half of this year look good, Savills says, with 37,000 sq ft already let to NHS Education for Scotland at Westport 102.
Available office space in Edinburgh at the end of June 2012 had fallen to 2.5m sq ft, taking the market back to where it stood at the end of 2008, and more in line with the long-term average level for the city, Savills says. The proportion of available space that is Grade A has continued to fall, with the firm estimating that only about 40% of the space available across the city is new or recently refurbished. And only 28% of the space available to occupy in the next six months in the central business district of Edinburgh is Grade A, it estimates, and this figure is unlikely to rise in the short to medium term given the current state of Edinburgh’s development pipeline.
Having said that, Savills calculates that the supply of available Edinburgh offices is currently around three years, at normal take-up levels. It notes that the question of what to do with the rising supply of secondary office stock is yet to be resolved. “We remain of the view that as the leasing market starts to recover we will see more and more of this non-prime office space being refurbished to compensate for the lack of development activity in the City,” it adds.
Take-up of office space in Glasgow by contrast has been muted this year so far, at just over 200,000 sq ft. This indicates a full-year total that will be well below the 10-year average, Savills says – but it is broadly in line with the five-year average for this market.
Occupiers in Glasgow have been demonstrating their cost-consciousness and are showing increasing interest in good-quality refurbishments, the firm notes, while investors have been attracted by the wider occupier base compared with Edinburgh – there has been a rise in leasing activity from the legal sector, for example, which Savills expects to remain active during the next 12 months.
Supply of available offices in Glasgow has been stable and there is an estimated 2.2m sq ft of available office space in the central business district, Savills says. The firm thinks less than a quarter of this is Grade A quality and notes that the development pipeline remains severely constrained.
