Office markets in key Scots cities show 'encouraging signs of recovery'
Office markets in Edinburgh, Glasgow and Aberdeen look to be in recovery mode, giving cause for optimism, according to property advisor CBRE, which has published its latest data on the sector.
Stewart Taylor, head of CBRE’s Scottish advisory and transactions business, said that while Scotland “isn’t as far down the lockdown exit road” as England, the office markets in each of these Scottish cities “are showing encouraging signs of recovery” in the third quarter of this year, led by Glasgow.
"Each of the markets has quite distinct characteristics, but the general trends are the same, with occupiers considering reducing their footprints and increasing quality,” he said. “The larger corporates are moving quickly through a period of analysis to determine what they will look like in the future with their strategies likely to emerge in early 2022.”
Take-up for the Glasgow office market totalled 289,209 square feet in the third quarter, the highest quarterly total since before the first pandemic-related lockdown. A total of 44 deals were transacted during the quarter, with the largest letting The Student Loans Company’s 75,000 sq ft pre-let of space at Buchanan Wharf.
Current office supply in Scotland’s largest city sits at 1.847 million sq ft, while there is a grade A vacancy rate of 0.34 per cent, with prime office rents growing to £35.25 per sq ft in the last quarter.
Alistair Urquhart, director at CBRE in Glasgow, said: “Prime occupiers want to be based in the city, to take advantage of its fantastic facilities, excellent transport links and educated workforce. The increase in both take-up and rents will also stimulate interest amongst investors, ensuring that the city attracts attention from across the globe.”
Turning to Edinburgh, office take-up totalled 145,864 sq ft in the third quarter, down 7.9 per cent from the previous three months, but 62.8 per cent up from January to March 2021.
Notable deals included the short-term 50,000 sq ft sub-letting of Elgin House, RSM’s 7,346 sq ft letting at 2 Semple Street, and Huawei acquiring an additional 3,861 sq ft at the same address, a deal in which CBRE acted on behalf of the landlord.
Occupancy levels for flexible space in Edinburgh are at an all-time high, and new city-centre grade A space remains at a premium with just 0.85 per cent currently available, CBRE added. Prime rents in Edinburgh continue to grow and are now sitting at £37.50 per sq ft with further growth expected by the end of the year.
Angus Lutton, surveyor from CBRE in Edinburgh, said: “As we continue to see occupiers return to the workplace, it is clear their drivers for choosing space have changed.” He added that environmental, social, and governance factors are “at the forefront of their decision-making”.
As for Aberdeen, a total of 51,316 sq ft was transacted across 13 deals in the third quarter, up 96 per cent from the previous three months. Key deals included Mental Health Aberdeen’s purchase of Langstane House.
Overall, just 492,020 sq ft of new grade A space is currently available in the city. Amy Tyler, senior surveyor at CBRE in Aberdeen, said the Granite City “is used to adverse market conditions, and it is a city with tremendous resolve” – while she forecast a robust level of take-up in the final quarter.