SCOTLAND’S biggest cities have enjoyed “significant” levels of office take-up over the third quarter of 2019 despite Brexit uncertainty – but this could soon change, experts have warned.
According to new figures from leading property consultancy QBRE, Aberdeen saw its largest office deal in three years take place, while Glasgow enjoyed its highest level of Q3 take-up in more than 10 years and Edinburgh investment levels pushed ahead of the long-term 12-month average.
Martyn Brown, a director in CBRE’s Capital Markets team, said: “Despite political uncertainty, the UK and Scotland is still witnessing significant investor demand from UK private equity and overseas capital, driven in part by the strength of the occupational markets.
“Scotland also offers good value to investors, with Glasgow prime office yields at 5% net initial yield and Edinburgh at 4.75%. Yields in Europe are comparatively ‘hot’ just now with prime office yields in Germany being 2.9%, 3% in the Netherlands, 2.8% in France and Switzerland, and 3.5% in Spain.”
CBRE found office take-up in the capital reached 134,274 sq ft in Q3, bringing the total for the year to date up to 497,668 sq ft and the 12-month total to 703,771 sq ft.
But CBRE Capital Markets team associate director Alistair Wright warned while the take-up in Edinburgh was encouraging, Brexit uncertainty is likely to slow down UK capital activity going forward. “Whilst traditionally Q4 has witnessed a rush of activity, we anticipate this to be limited until negotiations between Westminster and the EU are progressed,” he said.
Edinburgh’s largest deal of Q3 was the letting of 35,000 sq ft at Forthstone in Edinburgh Park. CBRE predicted the city’s total take-up for the year would be close to 700,000 sq ft.
Meanwhile, office take-up in Glasgow for the third quarter was described as “exceptional” by CBRE associate director Alistair Urquhart. He added there is cause for optimism with the “total take-up for 2019 expected to bypass the 5-year average of 700,974 sq ft following the strong Q3 performance”.
And in the North East, Aberdeen saw 122,770 sq ft of office take-up, a 27% rise on Q3 2018, and enjoyed its largest deal in three years with the letting at Aberdeen International Business Park to Oceaneering.
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