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Edinburgh has a thriving economy whose diversity and scope for growth attracts FTSE 100 companies and other large firms mainly in banking, insurance, finance, media, and technology. Since all these are office-based industry sectors, the demand for office space in the city is robust, and in fact Edinburgh is one of the six most important commercial property markets outside London. But how does demand affect office rental values in this Scottish city? Read on to find out.

Trends Affecting Office Rental Prices In Edinburgh

The TMT sector has recently become the most important forces driving the growth of the local office market. During the first three months of 2017, this sector accounted for nearly 33 per cent of all office take-up in the city. Education is another key occupier of office space in the city, mainly due to the presence of four prestigious universities.

With increasing demand from high-growth sectors comes diminishing availability, so scarcity may become drive office rental prices up within the next couple of years. Moreover, a considerable amount of lease expires in the 2017-2018 period is likely to cause spike in average rents. While rental increases are not expected to be too drastic, they may exceed the £35 / square foot mark by the end of 2017.

Edinburgh Office Prices By Area

According to researchers at Knight Frank, headline office rents across the city average £33 / square foot. Incentives like rent-free period of 18 months for 10 year leases are common, which brings the net effective rental value down to £28 / square foot.