John McLellan: Edinburgh property is in short supply

A shortage of commercial property is affecting Edinburgh's economy (Picture: Toby Williams)
A shortage of commercial property is affecting Edinburgh's economy (Picture: Toby Williams)
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There is much gloom about Scotland’s immediate economic prospects, with the Fraser of Allander Institute predicting sluggish growth of 1.4 per cent next year compared to the Treasury projection of 1.5 for the UK.

But whatever is happening elsewhere in Scotland, optimism is not in short supply in Edinburgh and a good indicator is the commercial property market.

In their recent property review, Edinburgh-headquartered experts Ryden said: “Any effect of the weak economic growth on the east of Scotland industrial market is difficult to see. Indeed the market has never been so ‘full’.”

READ MORE: Why are Edinburgh’s property prices rising faster than anywhere else in UK?

Similarly, Ryden reported a “strong” six-month period for office lettings. The reason would appear to be political, and for a company which advised the Scottish Government on its planning bill, its analysis is bold: “The possibility of a second Scottish independence referendum in the near future has abated. This has undoubtedly helped to restore some confidence in the market and investor sentiment towards Scotland has improved.”

What is in short supply is more property and it could put the brakes on the city economy. On industrial development Ryden says: “There is a lack of supply and it is difficult to see this changing in the short to medium term. The rate of new development and refurbishment is so limited that it has had very little impact on the market.”

READ MORE: Hot property as Edinburgh flats sell in two weeks

On office space, several recent major deals have soaked up vacancies, such as the merger of Standard Life with Aberdeen Asset Management and the move of State Street Bank into the Quartermile. Again, immediate supply is the issue. “Grade A supply remains extremely tight and speculative development is limited,” says Ryden. City council take note.