Office take-up across Scotland ‘bucks UK trend’

St Andrew's Square, Edinburgh, completes during November 2016, following a 108,000 sq ft prelet to Standard Life Investments
St Andrew’s Square, Edinburgh, completes during November 2016, following a 108,000 sq ft prelet to Standard Life Investments

This year’s total office take-up across Edinburgh, Glasgow and Aberdeen is in line with last year’s performance despite a subdued Summer period following the EU referendum, according to the latest Scottish Offices Report from Savills.

With 1.7 million sq ft (157,930 sq m) of office accommodation let by the end of Q3, the figures set Scotland apart from the rest of the country where the UK average for office take-up in 2016 has fallen by 10 per cent when compared to the same period in 2015 (excluding London and M25 markets).

Total take-up to the end of Q3 reached 771,825 sq ft (71,702 sq m) in Edinburgh while Glasgow saw 761,271 sq ft (70,722 sq m) with one third of all activity taking place in the city’s out of town market. The fastest growing sector in both cities has been TMT with key deals to Cirrus Logic at Quartermile 4, Edinburgh and Sky at City Park in Glasgow. Aberdeen has seen a timely pick up in its office take-up during the third quarter of 2016 as it reached 146,514 sq ft (13,611 sq m) as at end Q3 2016.



Simpson Buglass, director in Savills Aberdeen office, said: “Lease events continue to underpin slowly improving tenant demand in Aberdeen which is also fuelled by attractive incentive packages being offered by landlords unseen in recent times. As occupiers opt for better quality properties, the unfit for purpose, obsolete and uneconomic stock will need to reinvent itself.”

The oversupply of office stock in Aberdeen has pushed total availability for the three cities up over the course of 2016, albeit only by 5 per cent, to 5.1 million sq ft (473,790 sq m). Edinburgh and Glasgow continue to see rental growth on good quality refurbishments driven by a lack of supply in both city centres. As a result both cities are seeing the gap between new build stock, where prime headline rents are in excess of £30 per sq ft, and refurbished stock reducing and the rental gap narrowing.

Keith Dobson, director in Savills Edinburgh office, said: “Edinburgh faces a challenge as to where good quality office accommodation will come from over the next 12 months with limited new Grade A options still available and high quality refurbishments such as Standard Life’s 1 St Andrew Square not expected to complete until end Q1 2017.”

David Cobban, director in Savills Glasgow office, added: “In Glasgow, new build Grade A availability has fallen by two thirds over the course of 2016 to stand at only 131,000 sq ft and with no new development likely until 2019, refurbishments will cater for demand until the next development cycle in 2018/19.”



Looking ahead, Savills says despite concerns over sustained low oil prices, the “spectre” of a second referendum on Scottish independence and the UK’s relationship with the EU, the outlook for the Scottish occupational market remains positive. Top rents are likely to remain level during 2017 across all three cities, says the firm, however new developments arriving in 2018 in Edinburgh and Glasgow will kick start renewed rental growth. Meanwhile in Aberdeen the market is showing green shoots after a quiet 18 month period as the oil price recovery slowly continues to build momentum.


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