Office take-up in Edinburgh was down on the last two quarters of 2016 and lower than the same period last year, according to Knight Frank.
Scotland’s capital saw 120,000 sq ft let across the city from July to September 2016, compared with 148,000 sq ft over the same period in 2015.
Technology, media, and telecommunications firms continued to drive activity in the market, accounting for 49,000 sq ft – 41% of the total.
However, demand for grade A space in the city centre remained strong, with 176,000 sq ft already let this year. The city is on course to outperform the 220,000 sq ft, 10-year average for annual city centre, grade A office take-up by the end of 2016.
Shortage of new-build stock is leading to an increase in refurbishments and is also pushing up prime rents.
Simon Capaldi, associate at Knight Frank, said: “If all the deals currently in legals and under offer conclude, we could be looking at another strong year for Edinburgh – approaching the 800,000 sq ft mark and well above the 10-year average.”
Toby Withall, office agency partner at Knight Frank, said: “Grade A space is fading in Edinburgh, with availability at lows we’ve not seen for some time.
“Any organisations with a lease event in the next year will have to think very carefully about their options. With a super-prime rent of £33 per sq ft achieved at Atria, and Grade A rents across the city centre reaching £29-£30 per sq ft, many will be priced out of the market and forced to consider accommodation on the city’s periphery – with the west of Edinburgh, in particular, likely to be the beneficiary.”
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