Edinburgh office rents grow at fastest rate in a decade

Prime office rents in Edinburgh rose by 8% in 2023, according to the latest research from Knight Frank. The percentage increase is the highest since 2015, when rents rose by 11% on 2014 to reach £28 per sq ft. Office rents have been rising steadily across the city since that time to reach £43 per sq ft last year. The average annual growth over the period has been 5%. Knight Frank’s analysis indicates that the demand for office space combined with a limited development pipeline could lead to a further rise in prime rents in Edinburgh city centre by the end of 2024. While the overall vacancy rate in Edinburgh held steady at 11% during the second quarter of this year, availability for new grade-A space has dropped to less than 0.4%, and second-hand grade-A availability stands at 6.7%. Andrew Hill, lease advisory partner at Knight Frank Scotland, said: “Rents for prime offices in Edinburgh have risen at a significant rate in the last 12 months. A big contributor to this has been the flight to quality we have seen since the Covid-19 pandemic, with occupiers favouring quality space in prime locations  with good access to amenities. At the same time, there has been very limited supply of stock coming through and that has put upward pressure on rents for in-demand properties.” He added: “With so little in the development pipeline and a lot of existing office space being repurposed for other uses, the grade-B and grade-C properties are also holding up well. There is a particular lack of stock in the city centre for smaller suites of less than 5,000 sq ft, which is one of the main contributing factors to rising rents in these markets.” Photo by Shutterstock