Thursday, January 24, 2024
Tough year ahead for availablity of Grade A space in Edinburgh
The availability of Grade A office accommodation in Edinburgh is set to decline sharply in 2008, creating stiff competition for space which can be occupied immediately, according to figures from property consultancy DTZ.
Last year saw office take-up rates in the Scottish capital hit a seven-year high, with 845,000 sq ft snapped up and market activity levels 33 per cent above those for 2006.
Major lettings in 2007 included HBoS's 62,500 sq ft letting at Lochrin Square and UK law firm Shepherd and Wedderburn signing a 15-year lease on 58,000 sq ft of space in Exchange Crescent.
However, the availability of space in Edinburgh has since dried up and 2008 will see demand outstrip supply.
Mark Jones, Director of Business Space Agency and Development in DTZ's Edinburgh office, said: "The market for Grade A space is growing as smaller companies in particular seek good quality open-plan space to meet corporate needs.
"The supply of open plan space in Edinburgh city centre is historically constricted. The ability of the city to quickly deliver new space to respond to market pressure is poor. As a result, the overall Grade A stock is low.
"This year will be a low point in the delivery of new Grade A space in the Scottish capital, and follows on letting success in the market in 2007 which is at its highest level since 1999.
"There will be a shortage of Grade A space and building options during 2008, particularly in the key locations of the Financial District and the New Town."
However, Jones added the shortage of supply of space this year will not be restricted to Grade A accommodation.
He added: "There is an even greater shortage of Grade B open-plan space, particularly in smaller units. As a result, occupiers who might otherwise have targeted this market are increasingly 'trading up' to Grade A space."
As a result of the restriction in supply, DTZ estimates that Grade A rent levels in the capital will this year rise to £30 per sq ft from £28.50 per sq ft.
Last year saw office take-up rates in the Scottish capital hit a seven-year high, with 845,000 sq ft snapped up and market activity levels 33 per cent above those for 2006.
Major lettings in 2007 included HBoS's 62,500 sq ft letting at Lochrin Square and UK law firm Shepherd and Wedderburn signing a 15-year lease on 58,000 sq ft of space in Exchange Crescent.
However, the availability of space in Edinburgh has since dried up and 2008 will see demand outstrip supply.
Mark Jones, Director of Business Space Agency and Development in DTZ's Edinburgh office, said: "The market for Grade A space is growing as smaller companies in particular seek good quality open-plan space to meet corporate needs.
"The supply of open plan space in Edinburgh city centre is historically constricted. The ability of the city to quickly deliver new space to respond to market pressure is poor. As a result, the overall Grade A stock is low.
"This year will be a low point in the delivery of new Grade A space in the Scottish capital, and follows on letting success in the market in 2007 which is at its highest level since 1999.
"There will be a shortage of Grade A space and building options during 2008, particularly in the key locations of the Financial District and the New Town."
However, Jones added the shortage of supply of space this year will not be restricted to Grade A accommodation.
He added: "There is an even greater shortage of Grade B open-plan space, particularly in smaller units. As a result, occupiers who might otherwise have targeted this market are increasingly 'trading up' to Grade A space."
As a result of the restriction in supply, DTZ estimates that Grade A rent levels in the capital will this year rise to £30 per sq ft from £28.50 per sq ft.
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