By Paul Curran, managing director at Quartermile, Edinburgh
Scotland’s property market is a very different landscape to that of several years ago.
Last year’s referendum may have slowed the property market down slightly, but there are signs the overall improvement in economic conditions across the whole country is finally starting to bear fruit in the commercial property market.
For the first time in several years, the demand for commercial property in Edinburgh is outstripping supply. Research from the property consultancy JLL shows office occupier take up during 2014 was at its strongest rate for a decade, despite the referendum on Scottish independence. Approximately 875,000 sq ft was transacted during the year, which is 13 per cent up on the 2013 figure of 773,000 sq ft.
This demand has given investors the confidence to start building commercial property speculatively. Building in this way is a strong signal of optimism because it means that investors have anticipated that demand will exist when the final product is put on the market.
Quartermile is just one of several mixed use schemes in Edinburgh to receive significant backing to develop commercial space. Last year, Quartermile struck an £80m funding deal with M&G Real Estate to speculatively develop two Grade A office buildings, a trend that is being replicated across other Scottish cities including Aberdeen and Glasgow.
‘The advantages are manifold’
Businesses shouldn’t underestimate the significance of all of this because Edinburgh hasn’t seen investment of this type since 2007. The advantages of a thriving commercial property sector are manifold, and can be seen in microcosm in mixed-use schemes like Quartermile.
Here, we see commercial and residential property supporting and feeding into each other, with positive consequences for the wider business community. High quality commercial tenants attract more and better quality retailers, which in turn improves overall amenities for residents. Improved residential areas with more and better quality retail and leisure facilities are good news for everyone and help to create a strong sense of place.
A bright future
The trend of commercial property investment looks set to continue, with more of an appetite from companies with funds to invest, fuelled by the fact that existing occupiers and new entrants to the market are actively looking for space. Once new office facilities are constructed it acts as a catalyst to attract new and existing businesses to the city.
Watch this space for updates as to how Quartermile’s own commercial property venture is developing…
Once complete, Quartermile will comprise over 1,000 apartments, in the excess of 350,000 sq ft of Grade A office accommodation, 65,000 sq ft of retail and leisure space and seven acres of open landscaping. The development is expected to be completed in 2018.