Capital office costs drop by a third as take-up stalls

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SHARED office space in the Capital is no longer the most expensive in Scotland after the cost fell by more than a third.

New figures have revealed a 36 per cent decrease in cost in the first quarter of this year compared with the same three-month period last year, while take-up has flatlined.

Space in Edinburgh was the UK’s most expensive outside of London just a year ago, but the city is now trailing behind Aberdeen.

Office space search specialist officebroker.com carried out the study, and said cheaper rates would attract more businesses to the Capital.

Known as the serviced office market – meaning a space is shared by companies – it is understood that excess supply caused by large firms such as Tesco moving to new premises was behind the significant price fall.

Take-up in Aberdeen, meanwhile, increased by 33 per cent, as did the average price.

Chris Meredith, head of UK sales at officebroker.com, which focused its study on the Capital’s EH1, EH2 and EH3 postcodes, said: “In the last few years Edinburgh has traditionally been one of the UK’s higher-priced office markets, with firms willing to pay a premium for space in the Capital.

“However, with the movement of several large occupiers in recent months, pricing across the city appears to have been affected.”

The survey, however, found commitment to the city was growing, with companies singing longer tenancy agreements.

Mr Meredith added: “Edinburgh’s flexible office space does continue to attract businesses and the lower pricing seen in the opening months of 2012 could help to bring a wider range of businesses into the city centre.”

Iain Taylor, associate at Ryden’s agency and development department in Edinburgh, said: “The serviced office sector has seen increased competition and I would say this trend happened in the past 12 months.

“Companies such as Tesco Bank are consolidating their teams in to one building.

“With the recession, everybody is looking for opportunities to reduce their costs but Edinburgh is the capital of Scotland and it is always going to be a desirable location for people to come and do business.”