Contrasting fortunes for Edinburgh and Glasgow office markets in 2022 after end-of-year flurry
Edinburgh’s office market witnessed an “extremely strong finish to the year” while Glasgow saw quarter-on-quarter growth though both cities faced challenges throughout 2022, new research reveals.
Releasing its “Big Nine” office market update covering the final quarter of 2022, property consultancy Avison Young said take-up of space in Edinburgh city centre amounted to 256,648 square feet, a jump of 50 per cent from the previous quarter. This brought total take-up in Edinburgh city centre to 641,330 sq ft for 2022, a marginal fall on the year before but 14 per cent above the ten-year average.
Edinburgh city centre take-up was led by the biggest signing of 2022 across all of the Big Nine UK cities - Blackrock’s 139,172 sq ft space at Dundas House. Other significant deals of the quarter included Rockstar’s expansion to 11,577 sq ft at Holyrood Park House and AAB Group’s 9,529 sq ft move to 81 George St. Prime headline rents have increased to £40 per square foot, the report noted.
Peter Fraser, director at Avison Young Edinburgh, said: “There are many similarities between Edinburgh and Glasgow office relocations. New lettings are being driven by ‘best in class’ office space to satisfy the increasing requirements occupiers are placing on sustainability. While Edinburgh saw a reduction in overall take-up, with 641,330 sq ft recorded during 2022, the number of deals is actually 14 per cent up on the long-term average, demonstrating greater deal volumes involving smaller, better quality office space, with headline rents gradually increasing over the year.
“Looking ahead to 2023, there is a very limited supply of prime and Grade A office stock, plus a restrained pipeline of new product in the city centre. Consequently, we are seeing a greater number of retrofit projects across central Edinburgh as landlords aim to achieve the same ESG [environmental, social and governance] benchmarks in existing buildings which occupiers are seeing delivered in new builds. We are also seeing an increase in enquiries for out-of-town accommodation following a couple of subdued years.”
In Glasgow, total take-up including the out-of-town market during the final quarter of 2022 was 151,329 sq ft, up 12 per cent from the previous quarter, bringing the overall total for the year to 581,934 sq ft. It means that 2022 was the city’s quietest year over the last decade and some 46 per cent below average take-up rates. Key deals in the fourth quarter included Siemen’s 14,488 sq ft letting at 2 Atlantic Square and Opus’ 10,801 sq ft move to Orbital House.
Michael Facenna, director at Avison Young Glasgow, said: “There were some key trends arising from our analysis of the figures for 2022 with the standout being the increasing demand from occupiers seeking fully fitted space or space with partial fit-out, particularly in the sub-5,000 sq ft market. Properties that saw lack of investment struggled during 2022, and this will continue to be the case this year unless landlords are prepared to take the plunge and provide the quality of space sought by the market.”