IN NOVEMBER, rents in the west of Edinburgh were slashed by some agents by up to 19 per cent to £16 a sq ft and others quickly followed at the start of a battle for tenants as the credit crunch really started to bite.
The bold move is slowly starting to pay off, with two major deals just completed, taking a total of 14,812sq ft (see Deals) – but a lot more has to be done.
West Edinburgh and Livingston are both suffering and a lot of the malaise goes back to Dec
ember 2006 when the two of them lost their RSA (Regional Selective Assistance) status.
Mark Jones of DTZ, who is marketing around 30,000sq ft at Almondvale Business park in Livingston, says that, at that time, areas such as Fife and the western parts of the M8 corridor retained their 15 per cent RSA grant and that meant the playing field was not exactly level.
In Livingston, the average office take-up between 2000 and 2006 stood at around 85,000 to 100,000sq ft a year.
The town was not seen as an outpost of Edinburgh and west Edinburgh but as a stand-alone opportunity with rents approximately 25 per cent cheaper than in west Edinburgh and average wage costs around 15 per cent cheaper.
Jones states: "There were, therefore, significant operational cost-savings and this combined with immediate connectivity by road and rail and the ability to draw on a very large staff pool within a 30-minute commute.
"For qualifying companies, the town also benefitted from its assisted area status and was able to offer RSA grants of up to 10 per cent to qualifying companies. In effect, over and above training grants, assistance was also available with capital expenditure which included fit-out and building purchases. This could be a significant sum.
"While it is difficult to attribute the performance since-December 2006 completely down to grant-aid, Livingston has shown a dramatic fall in fortune."
He says there has been building availability across all sizes and last year saw only 35,000 sq ft take-up.
This was all local churn with no single large transaction. Indeed, British Energy left the town and relocated to Strathclyde.
The good news is that, since the start of this year, limited grant aid is again available but this is for smaller companies and not for those that can fill the vast areas of space waiting for them.
Jones believes that the government should be doing more to bring in larger organisations. He states: "If the government was to react and make RSA encompass all occupiers, Livingston and west Edinburgh could again be drawing in large-scale employers – a recession-beating move."
He says that lower property prices are making British cities outwith London a magnet for large financial services to house key support divisions.
He points out that Deutsche Bank opened a service support office in Birmingham last year and Citigroup moved most of its trade settlements to Belfast. Jones says: "These are typical examples of what we are missing out on – and RSA could be a key attraction."
His RSA plea is echoed by Angela Lowe, head of office agency in Edinburgh with Cushman & Wakefield who, along with Ryden, is marketing Connect Edinburgh, the Scotmid business park development and west Edinburgh.
Grade A offices from 1,335sq ft to 19.720sq ft will be ready for occupation in June. The business park is aimed at small and medium-sized businesses or a headquarters operator. The rents are a flexible £17.50.
As Lowe explains: "Everybody is looking at costs and tenants are in a very strong position to negotiate good deals. They are being offered generous incentives."
Onyx clocks on at Clockhouse EstateIN ONE of the biggest deals of the year in the west of Edinburgh, the Onyx Group has taken 12,336sq ft in the Sirius building on the Clockhouse Estate in west Edinburgh on an undisclosed rental which was probably in the region of £16 a sq ft. The KUC Properties three floors had been empty for some time and the original Onyx requirement was for one 4,000sq ft floor but after a visit it liked what it saw and opted for all three.
DTZ and Jones Lang LaSalle acted for the landlord, with Graham & Sibbald for Onyx.
EQUINITI, the UK's leading provider of share registration services, previously Lloyds TSB Registrars, has taken 2,476sq ft in the Dunedin Property-owned South Gyle Business Park, Edinburgh, on an undisclosed stepped rent. Cushman & Wakefield acted for Equiniti.
A DOUBLE deal for Industrious Asset Management – it has secured new office premises at 1-4 Glenfinlas Street in Edinburgh and at the same time disposed of its existing offices at 39 George Street. Industrious, advised by Jones Lang LaSalle, took a sub-lease until 2014 from outgoing Murray Beith Murray for the 3,053sq ft ground floor, part of a modern townhouse development, while the Medical Protection Society picked up the George Street premises on a ten-year lease. HB Surveyors represented the Medical Protection Society, Montagu Evans for Murray Beith Murray and King Sturge for The Crown Commissioners, the George Street landlord.
HOOVER Candy have signed a 15-year lease for 8,555sq ft at 1 Forrest Gate, the HF Developments Tannochside Business Park at Bellshill. The deal will see Hoover re-locate from Cambuslang and establish its small domestic appliance research and development centre at Tannochside. Colliers CRE and Cushman and Wakefield are joint letting agents.
LAWYERS CMS Cameron McKenna, represented by Graham & Sibbald, has let Migvie House in North Silver Street, Aberdeen, to Codify, an Aberdeen-based IT company, at a rent of £91,350. Knight Frank acted for Codify in what was a sub-lease of an unexpired term.
THE recently-completed 80,000sq ft Springkerse Trade Park at Stirling has secured a clutch of tenants. Eight of the 11 units have been taken up in the speculative development by Allanwater Developments. The new tenant line-up includes Screwfix, Greggs, Tile Giant, Tile Star, The Bay and Guardian Systems, with Colliers CRE the agents and rents of up to £8.50 a sq ft being achieved.
• Send deals details to
jimdow@lumison.co.uk