Edinburgh’s Commercial Property Mood Swings to the Positive

The mood in Edinburgh is lightening as the office market eases itself out of the recession. “The first quarter was better than anticipated,” said Craig Watson of Jones Lang LaSalle, ”which was helped by a couple of substantial deals, 5,111 sq.metres (55,000 sq.ft.) to the Scottish Qualification Authority band 3,715 sq.metres (39,984 sq.ft.) to NHS West Lothian.” Broadly speaking, the demand is for smaller units but Watson said “the encouraging change is that we are seeing enquiries for larger units. There is also a broader range of companies, from IT to financial services, seeking space.” Looking ahead the market will become increasingly dominated by the fact that there are no new offices under construction and none are likely to be completed until at least 2013.”That means a move towards a stronger landlord position away from the dominance of tenants,” Watson added.

From that will follow a decline in the incentive packages which Watson noted will come back later in the year and have probably reached their peak now. Stewart Taylor of CB Richard Ellis is encouraged by the shorter time scale on deals and a growing awareness that new space will not come through for some years. “There has been increased demand for flexible space, such as at Heriot Watt Research Park.” “Confidence has increased in the financial and banking sector,” added Taylor,”and with the prospect of a shortage of prime space they are holding onto offices.” What is interesting is that the dire predictions on the fall-out from the problems of the HBOS and the Royal Bank of Scotland have failed to materialise, adding further to the improved mood.

Equally as encouraging is that occupancy at Edinburgh Park has increased and is now up to 92%, said New Edinburgh Limited (NEL). The latest letting is to the technology company Agilent which has taken on enough space for an additional 200 staff. NEL’s Pamela Grant commented: “Edinburgh Park has reached another exciting stage and this surge in occupier activity is testament to its success. There continues to be a strong interest from new occupiers.”

The Scotland Commercial Property Register

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