| scotland


ANNUAL EDINBURGH OFFICE SPACE TAKE-UP SURPASSES 1MILLON SQ FT A


ccording to the latest research from CBRE Scotland, Edinburgh has surpassed the 1,000,000 sq.ft take-up mark for the first time since 2004, with 1,138,500 sq.ft of office space transactions across the four quarters of 2017.


The 2017 Angela Lowe


take-up reported was also higher than the previous 5-year total of 808,833 sq.ft, with large pre-lets including the GPU relocation at New Waverley (186,500 sq.ft) and State Street Bank (65,628 sq.ft) at Quartermile 3


contributing significantly. Further pre-lets include Standard Life Aberdeen taking 69,000 sq.ft at 10 George Street and Computershare leasing 41,395 sq.ft at Four North.


Angela Lowe, senior director in CBRE’s Advisory and Transaction Services team,


commented: “The Edinburgh office market activity witnessed in 2017 demonstrates that occupiers are increasingly considering pre-lets in order to secure space of the required size and quality in their preferred locations. Recent take-up also indicates the continued importance of the financial services and tech sectors in generating demand for quality, city centre offices.”


Despite the strengthening demand in


take-up, supply remains at a critically low level, with only one development scheme to complete in 2018: GSS Development’s 2 Semple Street. Completing in July 2018, it will provide 38,648 sq.ft of first class Grade A office accommodation in a prime city centre location. Stewart Taylor, senior director in CBRE’s Advisory and Transaction Services team, added: “The list of reasons as to why there is so little development is getting longer: a lack of sites, limited speculative finance available, the growth of more attractive property asset classes, the loss of buildings to alternative uses, the political landscape in Scotland – the list goes on.


TRANSACTIONAL VOLUME IN SCOTLAND T W


OVERSEAS INVESTORS DRIVE


ith the constitutional clouds that have darkened Scotland's skies over


the past five years showing little sign of clearing, the investment property market in Scotland continues to be heavily reliant on overseas investors for transactional volume. Benefitting from a weak pound, international funds have driven a market in which prime office yields remain stable at 5.25-5.5% in both Edinburgh and Glasgow. Encouragement can be taken from the fact that new entrants to the Scottish market are appearing, with the recent sale of Morgan Stanley's new headquarters on Waterloo Street, Glasgow


Alan Stewart


being the first purchase of Scottish commercial property by Korean investors. Familiar faces have also been active, with the German fund Patrizia completing the purchase of the Apex 123 building near Haymarket, just before Christmas.


72 Edinburgh, in particular, enjoyed a


strong take-up of office space in 2017, with the Government Property Unit committing to 16,700 square metres being a particular highlight. There is, however, an acute lack of new stock coming onto the market, and when combined with the trend of the redevelopment of out-of-date offices for alternative uses, the supply pipeline is particularly squeezed.


It must be hoped that the proposed


rates holidays for first occupiers of newly-built properties has a positive effect in incentivising new properties to come out of the ground – all eyes will be on the long-gestating Haymarket project in that regard.


In the retail and leisure sector, the


development of the mixed-use St James scheme, together with the appearance of several well-known (and historically solely London-based) restaurant chains in the nearby St Andrew Square, can be expected to lead to an increase in rents and investment values for properties in the east end of Princes Street. Alan Stewart is a partner in Dentons' Real estate team www.dentons.com


This is the new normal. Rents will remain under pressure, particularly for upper floors, resulting in significant change across the property landscape.” Edinburgh is part of the 2017 Big 4 Club: four cities reporting over 1,000,000 sq.ft of take-up. The other members are Manchester, Leeds


Stewart Taylor


and Birmingham, breaking the mark for the first time in recorded history. All four regions take-up figures include GPU deals, with the largest UK GPU deal totalling 380,000 sq.ft at Wellington Place in Leeds.


GALBRAITH GROWS


he commercial business team at Galbraith has welcomed experienced chartered surveyor Nicola Charleston to the firm’s Edinburgh office. The appointment is notable because Nicola previously worked for Galbraith and is returning to the fold after five years living and working in Sydney. Nicola was


previously employed in Galbraith’s Perth office for two years before jetting off to the sunnier climes of Australia in 2012. She has now returned to Scotland and is back working for Galbraith with responsibility for clients in Edinburgh, Perthshire and Stirling.


Nicola Charleston


Nicola works with landowners, rural estates and private individuals who are looking to create an income stream from their land, by undertaking planning research and preparing strategies to identify the future potential of sites. Nicola and the commercial team also advise on valuation, renewable projects and approaches to rating appeals.


COMMERCIAL PROPERTY MONTHLY 2018


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