Deals involving office space of 5,000 square feet and over in the first quarter of 2022 rose compared to the same quarter pre-pandemic, according to commercial property consultancy JLL.
The average UK occupancy levels from research done by the firm peaked in Q1 at 38 per cent.
In Edinburgh, there was a total take-up of just short of 130,000 sq ft in the past quarter, with about 90,000 sq ft of this in the city centre. There was also an increase in the number of occupiers looking for space in Q1, compared to the first quarter of 2019, with professional services and technology, media and telecoms (TMT) the most active sectors at the start of this year.
After a “tumultuous” 2020 and 2021, many occupiers are focusing on creating a “compelling employee value proposition” to attract and retain skilled talent amid increased competition, JLL noted.
As a result, the number of second-hand options coming back to market is also on the rise, as firms target higher quality buildings and require less space as a result of the shift to hybrid working.
Craig Watson, director at JLL in Edinburgh, said: “It is clear from our Q1 research that the number of office requirements in Edinburgh is back up to pre-pandemic levels. This pent-up demand is not yet evident in transactional activity.
“Many occupiers are hesitant as restrictions are removed, waiting for their analysis on the ‘return to the office’ movement to run its course. This has undoubtedly delayed decisions and reduced transactions for this quarter.
“Hybrid working and sustainability are still the core themes driving demand, resulting in the best-in-class office space letting quickest. Knowing the extent of unsatisfied demand, we forecast transactional activity to grow in strength quarter on quarter this year.”
In Glasgow, take up across the city center grew by almost 33 per cent, compared with Q1 figures from 2021. With work from home guidance relaxed in February 2022 positive sentiment has returned to the city’s office market, JLL added.
Similarly to the capital, Glasgow saw more occupiers targeting higher quality space in the city, with many prioritizing flexibility and a better working environment for their staff.
JLL noted that new build grade-A supply in Glasgow was limited with only one new build development due to complete in the next three months, much of which has already been pre-let to a range of “high quality” occupiers.
Alex Mackay, senior surveyor at JLL in Glasgow, said: “After a prolonged period of subdued activity, Glasgow’s office market is showing signs of recovery after the pandemic.
“As firms begin the process of attracting staff back to the office, they are seeking quality and flexibility in their real estate decision making.
“Like the capital, a common theme after the pandemic is occupiers increasingly paying attention to the ESG [environmental, social, and governance] agenda, which in addition to hybrid working are driving demand for best in class office space.”
Bullish outlook for Scots commercial property amid ‘almost insatiable’ appetite …
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George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.