Knight Frank: Edinburgh faces Grade A space dearth amid rising demand

Knight Frank: Edinburgh faces Grade A space dearth amid rising demand

Despite a summer dip in take-up, Edinburgh’s office market has begun “moving in a positive direction” as organisations recognise the post-pandemic advantages of maintaining a central hub for employees, according to Knight Frank.

The independent commercial property consultancy reported 103,409 sq ft of office space taken up in Edinburgh city centre during the third quarter of 2023 – down 14.7% on the same period last year. Take-up for 2023 so far has reached 431,407 sq ft, with another 331,500 sq ft of requirements still on the market.

There is currently no new Grade A space available for occupiers in Edinburgh city centre, with 30 Semple Street the only Grade A scheme currently on site and not set to complete until Q3 2024.

There was a strong level of activity in the energy and technology, media, & telecommunications (TMT) sectors, representing 30% and 17% of activity respectively. Energy company Enoda secured 14,641 sq ft at Quartermile 3, while software developer Addepar took 9,180 sq ft at Quartermile 1 in two of the biggest deals of the quarter.

Simon Capaldi, office agency partner at Knight Frank Edinburgh, said: “Occupiers are starting to understand that there is a real need for some form of office space post-pandemic. At the same time, they are looking to use it in a different way – for example, having more collaboration space or using their space as a city centre hub.

“The flight to quality continues, with the focus for most occupiers on securing best-in-class space with strong ESG credentials. There is a strong desire from occupiers to move and complete their leases quickly, which is driving demand for fitted space that can reduce lead in times and initial capex outlay.

“However, the limiting factor for leasing activity in the city is the availability of good quality space. A real bottleneck of high standard supply is emerging – occupiers will have to wait for the completion of new developments such as New Clarendon on George Street and 30 Semple Street, to get the kind of space they are increasingly looking for.”

Share icon
Share this article: