| scotland


IN MY VIEW C


ompanies are starting to make real estate a priority, recognising the impact that property has on people. We’re seeing a move towards mixed-use


developments, blurring the lines between work and life, creating a real sense of place- making. Edinburgh’s Quartermile is a perfect


example, with a mix of


Simon Capaldi


buildings – old and new –


accommodating apartments, offices, restaurants, bars and gyms.


The One Lochrin Square development highlighted this interest in collaborative, co-working facilities, and we will begin to see a steady flow of similar buildings throughout Edinburgh and Glasgow. Real estate can play a key role in promoting the ever-so-important work-life


IN MY VIEW T Simon Capaldi, Partner at Knight Frank in Edinburgh


balance, in turn, boosting productivity and output. A successful office location is one which supports both the attraction, and crucially, the retention of highly skilled staff - it can, and should, act as a talent magnet.


Connectivity should also be a priority for landlords, especially as Glasgow and Edinburgh look to accommodate the requirements of more tech start-ups. Scotland’s digital sector is forecast to grow more than twice as fast as its overall economy by 2024, and has seen the government aiming to supply superfast broadband for every business by 2021. Steps are being taken in the right direction, however. The Caledonian Exchange office building in Edinburgh, for example, was the first in the city to be awarded the Wired Certification for digital connectivity, highlighting it as a priority for landlords.


Businesses are coming to expect more from their working environments, and rightly so. The right environment can boost staff wellbeing and productivity, with positive consequences for the overall health of businesses.


Alasdair Steele, Head of Scotland Commercial at Knight Frank


owards the end of 2017, we saw some significant purchases of Scottish


commercial property, including Edinburgh’s largest-ever office deal, which saw Legal & General fund the new HMRC offices at New Waverley, and also the sale of Saltire Court by ADIA. In spite of widespread political uncertainty, levels of activity have remained solid. In fact, Edinburgh’s four largest office transactions since records began have concluded in the past 36 months. Yet, as attention- grabbing as big numbers might be, it’s not always the full story. Behind the


Alasdair Steele


big deals, there has also been an increase in demand for secondary office assets, with a number of investors, particularly from the UK, moving up the risk curve towards assets with higher yields in locations beyond prime areas. This has been driven partly by the level of competition for prime assets, and partly by the ripple effect which has resulted in greater tenant demand, and therefore


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rental growth, for secondary assets within this sector. Of course, prime locations are still


attractive to investors and remain the main focus. This is certainly true for Edinburgh, with the spotlight shining on the city’s retail offering of late. At the end of last year, Knight Frank was instructed to bring the iconic House of Fraser building on Princes Street to the market. Despite lingering question marks regarding House of Fraser, the sale generated huge interest, from both local and overseas investors, and was sold to Parabola for significantly ahead of the asking price. The sale is further evidence of the investor appetite for all things Edinburgh and is a reassuring indicator that some traditional retail offerings, which are struggling in their existing guise, can still be sought after by investors due to their alternative use potential. Over recent years the market in


Edinburgh has been dominated by overseas investors but as the perceived political instability in Scotland recedes, UK funds have once again started to look north of the border. This has created a strong pool of buyers which, all other things being equal, is likely to drive pricing over the coming months.


EXCHANGE DIGITAL CONNECTIVITY


A


n Edinburgh office building has become the first in the city, and one of the few in Scotland, to scoop a top industry certification for its digital infrastructure and technology-focused design. Caledonian Exchange, marketed jointly by independent property consultancy, Knight Frank, and Eric Young & Co, has been awarded a Wired Certified Silver rating, which recognises buildings excelling in the implementation of digital technology.


CALEDONIAN


The office accommodation, located by


the Western Approach to the city centre, recently underwent an extensive £120,000 refurbishment project. Its current tenants include property and planning consultancy, Rapleys; recruitment firm, Hudson; engineering consultancy, Mott MacDonald; law firm, Lindsays and telecommunications company, AT&T.


In its most recent letting, Macmillan Cancer Support expanded its operations in Edinburgh by taking 4,533 sq.ft at Caledonian Exchange. Since coming onto the market, the building has enjoyed significant occupier demand, with only 10,863 sq.ft of space remaining on a single floor plate.


Simon Capaldi, Office Agency Partner


at Knight Frank, said: “The demand for high-quality office space is at an all-time high in Edinburgh; especially as the city looks to accommodate the requirements of more tech start-ups and a rise in activity within the fintech sector. “Caledonian Exchange’s recent Wired Certification highlights digital connectivity is increasingly a priority for landlords in both new build office accommodation, and refurbishment projects like this one. The certification is a well-deserved accolade for the office building, which has attracted a great deal of interest since the completion of its refurbishment.”


William Newton, President and EMEA MD at WiredScore, said: “Caledonian Exchange is a strong example of a building which has been refurbished with technology and connectivity front of mind. Commercial property continues to play a vital role in the development of smart cities.”


COMMERCIAL PROPERTY MONTHLY 2018


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