Savills: Edinburgh office market remains resilient

Savills: Edinburgh office market remains resilient

30 Semple Street

Take-up of office space in Edinburgh hit 649,000 sq ft in 2023, just 0.9% below 2022’s figure, according to real estate expert Savills.

Despite this minor fall, it remains 0.5% higher than the five-year average for the city, as more occupiers get to grips with what they both need and want from their office space.

Savills noted that in light of the shortage of supply in Edinburgh, businesses are starting to look up to three years in advance in order to secure good quality office accommodation. In 2023 prime and Grade A space accounted for 56% of city centre take-up, suggesting occupiers are still driven by a flight to quality.

As a result, there is currently 700,000 sq ft of live unfulfilled requirements seeking premium office space in the city. However, looking at deliverable pipeline over the course of 2024 there are just three Prime buildings: 24 St Andrew Square, 30 Semple Street and Clarendon House, under construction with circa less than 120,000 sq ft of availability (taking into account space that is under offer).

As a result of the ongoing supply/demand dynamic Edinburgh has seen robust rental growth with prime space already under offer at £45 per sq ft, an increase of 5% on 2023. This should, Savills believes, provide confidence to developers looking at the potential for future speculative development.

Mike Irvine, director in the office agency team in Edinburgh, said: “Overall, despite ongoing economic uncertainty Edinburgh has remained resilient. Occupiers now have a much clearer understanding of their requirements and recognise that they need to start their search as early as possible to secure best in class office accommodation. Given the difficulties around delivering new stock, this should give developers the opportunity to seek pre-lets in order to assist with the funding of new space. We will also see landlords refurbish existing buildings in order to continue to attract and retain businesses moving forward.”

Mark Walsh, EMEA head of corporate account management, Global Occupier Services at Savills, added: “We’re seeing many occupiers having a clearer understanding of their real estate requirements post-Covid. Businesses continue to focus their leasing requirements on Grade A offices which have excellent ESG credentials. This has been driven by the desire to satisfy employee needs and ensure staff return to the office in addition to supporting wider corporate sustainability ambitions.”

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