Growth in office-based employment drives take-up in Scotland

 

According to the latest figures from Oxford Economics, Aberdeen, Edinburgh and Glasgow's combined office-based employment is expected to rise by 0.6 per cent per annum over the next five years, outperforming the previous five year’s growth average of 0.5 per cent per annum.

Growth in the number of office jobs acts as the key driver of the future take-up of workspace and these forecasts indicate that by the end of 2021, a net additional 10,800 office jobs will be created across the three Scottish cities. At a relatively dense ratio of one person per 8 sq m of space, this indicates a net increase of over 900,000 sq ft of occupied offices.

Glasgow is set to contribute the highest number of office jobs, followed by Edinburgh. Aberdeen is also set to see a pick-up in employment growth over 2020 and 2021, though this is likely to depend on whether the energy markets recover their position. Despite any initial shock around the EU referendum result, hiring sentiment has already swung back and according to Deloitte's Chief Financial Officer’s (CFO) survey, 9 per cent of CFOs expect hiring to increase over the next 12 months, up from 1 per cent immediately after the referendum. With improving sentiment on the UK's relationship with the EU, employers are increasingly optimistic.

In terms of sentiment on the street, our latest Scottish offices report shows take-up within the three Scottish cities has remained strong in 2016, reaching a total of 1.7 million sq ft as of the end of the third quarter, the same level as at this stage during 2015. Putting this into context, UK average take-up (excluding London and the M25) has fallen 10 per cent in the same period.

Edinburgh saw a very strong first half of the year, followed by a typically quieter third quarter. Total take-up as at end Q3 2016 reached 771,825 sq ft, in line with the level recorded at this stage during 2015. One key deal during the second quarter was Chris Stewart Group's acquisition of the 35,000 sq ft Blenheim House for refurbishment. Aberdeen has seen a timely pick-up in its office take-up, reaching 146,514 sq ft as of the end of Q3 2016, of which 64,550 sq ft was completed between July and September – the strongest quarter in terms of office take-up in the city since Q2 2015.

Glasgow, meanwhile, has seen a stellar year so far, with take-up reaching 761,271 sq ft as at end Q3 2016, a 26 per cent increase on the same period during 2015. AXA took 49,500 sq ft at Cuprum during the second quarter as it moves its headquarters from Atlantic Quay. Glasgow's out-of-town market has remained buoyant, contributing one third of total take-up, as rents remain competitive for high quality space.

So in a nutshell, generally we are positive, however we do not ignore the real possibility of a second independence referendum, which could, along with the uncertainty that surrounds it, curtail current sentiment and impact occupational confidence.

Further information

Contact Savills Offices team 

In plain English

Read more

Savills on Twitter

Follow us on Twitter

If you have any comments or questions regarding the Savills blog just drop us a line.

Email the Editor