The amount of office space regeared in Edinburgh has surged by 45% in the past year, among wider signs that its occupiers decided against relocation in 2019.
There were more than 26 regearing deals across around 275,000 sq ft in 2019, according to new findings by JLL. This compares with a five-year average of 23 deals per year, totalling around 200,000 sq ft.
Notable deals included Citi at Holyrood Park House (17,000 sq ft), Aecom at Tanfield (17,000 sq ft) and JPI Media at Orchard Brae House (15,000 sq ft.)
The number of office requirements logged in 2019 was equal to the number logged in 2018, but the number of viewings had dropped by more than 35%.
JLL posited that tenants were testing market conditions, but were “not serious about progressing a relocation”.
Around 650,000 sq ft of leasing deals completed in 2019, dropping 35% from 1m sq ft in 2018, and 5% down on the 10-year average.
During the final quarter of the year, 111,000 sq ft was transacted.
JLL said political uncertainty, a lack of choice, and growing rents all had a slowing effect in 2019. However, the market is expected to become more active this year.
Ben Reed, director at JLL in Edinburgh, said: “Occupiers were certainly more nervous about short-term economic prospects in 2019 due to Brexit and the General Election.
“This type of uncertainty has been commonplace in Scotland over the past decade. It can knock confidence, which is unquestionably bad for business. This led to many relocation decisions being put on hold in 2019.”
Craig Watson, director at JLL in Edinburgh, said: “2019 should be remembered as a year during which the market continued to prosper despite the odds stacked against it.
“An office is no longer just somewhere to work, so in 2020 we predict a more energised market with sustainability and technological advances becoming more prevalent for both occupiers and landlords.
“Key city infrastructure improvements such as new segregated cycleways, the tram extension, new pedestrianisation zones and the completion of Edinburgh St James will also undoubtedly improve the attractiveness of the city for businesses.”
The next major new build completions in Edinburgh are Capital Square by BAM in early 2020 (120,000 sq ft), and New Fountainbridge by Vastint (60,000 sq ft) in late 2020.
In 2021, The Haymarket mixed-use development by M&G Real Estate and Qmile Group will deliver 110,000 sq ft of new offices in its first phase with around 270,000 sq ft in its second phase.
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