Edinburgh office market deals were down 45% last year amid economic uncertainty, according to property firm JLL.
The company dealt with transactions for 650,000 sq ft of office space in 2019, compared with one million sq ft in 2018 and 5% short of the 10-year average. In the final three months of 2019, 111,000 sq ft was transacted.
JLL predicted the market will be more active in 2020 as it puts the political uncertainty, lack of choice and growing rents of 2019 behind it.
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.”
The number of office requirements logged in 2019 matched that of 2018 but viewings dropped by more than 35%, suggesting occupiers were merely testing market conditions, said JLL. There was a 45% rise in lease renegotiations, up to 275,000 sq ft over 26 re-gear deals, as many occupiers chose to stay put rather than relocate. That compared with a five year average of around 200,000 sq ft in 23 deals a year. Notable re-gears 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.)
JLL director Craig Watson 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 pedestrianization 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 which will deliver 110,000 sq ft of new offices in its first phase with around 270,000 sq ft in a 2 phase.