Scotland's office market is experiencing a unique challenge: while overall vacancy rates remain high, the demand for premium, high-quality office space is outpacing supply.
The commercial property landscape in Scotland is undergoing a significant transformation. While vacancy rates across the board might suggest an abundance of office space, the reality is more nuanced. The market is grappling with a shortage of premium office spaceparticularly in city centers.
This shift is redefining the dynamics of the commercial property sector, with occupiers increasingly focused on securing high-quality, Grade A buildings.
This trend is most pronounced in Glasgow and Edinburghwhere the demand for top-tier office space is creating a competitive environment.
The limited availability of such spaces is driving occupiers to vie for a dwindling pool of high-quality buildings, reshaping the market in the process.
Glasgow’s office market: a tale of two realities
Data from CoStar Group reveals a growing disparity between perception and reality in Glasgow’s office market.
While the narrative post-Covid has been one of widespread office vacancies, the truth is more complex. According to Grant Lonsdalesenior director of market analytics at CoStar, the situation is quite different when focusing on the top end of the market. “There’s actually very little available” in the premium segment, he notes.
The imbalance is particularly evident for occupiers seeking around 10,000 sq ft on one floor in a five-star building. In Glasgow, there is effectively only one option, and the same is largely true in Edinburgh. This scarcity is driving up demand and deal sizes, with more than 300,000 sq ft taken up in Glasgow in the first quarter alone. Average deal sizes have increased by around 60 percent over the past couple of years.
However, supply is not keeping pace. Construction of new office spaces is at historically low levels, with only a couple of major refurbishment projects underway. This lack of new supply is exacerbating the competition for premium office space.
Recent high-profile lettings underscore demand
Several recent high-profile lettings highlight the robust demand for premium office space in Scotland. N-Able has secured space at Exchange Crescent in Edinburgh, reflecting continued demand from technology and business services firms for well-located, high-quality space. Exchange Crescent remains a prestigious location within the Capital’s office market, offering modern accommodation in a well-established business district.
The letting underscores the breadth of occupier demand, with both large corporates and growth companies active in securing prime office space. Similarly, Shawbrook Bank has taken 26,700 sq ft at Atrium Court in Glasgow, one of the largest recent office lettings in the city. This deal highlights the return of larger occupiers to the market, with businesses prioritizing location, specification, and access to amenities.
Sky also took on 26,100 sq ft of office space at 55 Douglas Street in Glasgow, securing occupancy across the fourth and fifth floors of the Grade A building. The deal, advised by CBREfollowed an extensive market search by the broadcaster and represents one of the largest recent office lettings made in Glasgow. Sky joined existing tenants, including offices for the Scottish Daily Record and Sunday Mail, earlier this year.
Aberdeen and Edinburgh: stabilizing markets
While Glasgow and Edinburgh are experiencing a surge in demand for premium office space, other cities like Aberdeen are seeing a more stabilized market. Great British Energy has taken space at Marischal Squareone of the Granite City’s most prominent Grade A schemes. This deal reflects steady demand for high-quality space, despite a more subdued local market backdrop.
In Edinburgh, EY has taken around 36,000 sq ft at 3 Haymarket Squaresubletting space within Baillie Gifford’s new Edinburgh headquarters. The move will see EY relocate from Atria One on Morrison Street, marking one of the largest recent office transactions in the city. The building forms part of a 280,000 sq ft development pre-let by Baillie Gifford, with flexibility built into the lease structure.
These transactions underscore the continued demand for large, high-quality space in central locations, reflecting a broader trend in Scotland’s commercial property market. As the demand for premium office space continues to grow, the market is likely to see further competition and innovation in meeting the needs of occupiers.
