Scotland business

Edinburgh 'running out' of grade A office space

Edinburgh skyline
Image caption GVA said there was very little new grade A accommodation under construction in the city centre

Edinburgh could run out of available top-quality office space within the next 18 months, according to a report.

Commercial property consultants GVA suggested demand would soon outstrip supply in the city centre.

It said supply was dwindling because of severe restrictions on available finance for new-build projects, and a lack of private sector confidence.

GVA argued the city was now in need of "urgent development" of grade A office space.

The report said there had been a high level of activity in the grade A office letting market in central Edinburgh in the past 12 months.

But it indicated that rapidly diminishing stock, together with transactions currently under offer in the market, would soon lead to a lack of suitable office accommodation to meet anticipated ongoing demand.

'Common misperception'

Toby Withall, national markets director for GVA Scotland, said: "There is a common misperception in Edinburgh's office market that the credit crunch and banking crisis led to the financial services sector dumping operational office stock on the market.

"However, this is not the case and in fact the vast majority of the main banks' operational stock remains occupied in both central Edinburgh and out of town."

Mr Withall said there was very little new grade A accommodation under construction in the city centre, with just two sites - both on Morrison Street - currently under construction.

He continued: "Research suggests there are a healthy number of occupiers with break options and leases that will expire in 2013-15.

"If as expected, these companies choose to relocate, demand will only increase, which in turn will have a positive impact on rental values.

"The lack of suitable office accommodation could lead to upward pressure on rental values by as much as 20% in the city."

Mr Withall added: "A clear opportunity exists therefore for developers and investors, particularly given the lead in time for construction and site establishment."

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