Pre-letting will be the key to securing prime office space in Edinburgh

This longer-term outlook is critical as there is little speculative development in the pipeline. Edinburgh, like many key regional cities across the UK, is facing a significant supply-demand imbalance. This can have a detrimental impact on prospective occupiers moving into the city so the requirement to strengthen the pipeline in key cities has never been higher.

In the past, securing a lease while a building was under construction was a common approach. Today, however, pre-letting off plan, before a contractor has even been appointed, may now be a necessity for those looking to secure prime office space in Edinburgh’s tightly constrained market. This means that businesses need to think much further ahead than they have in the past. What used to be a two- or three-year planning horizon now requires occupiers to plan four or even five years ahead.

A prime example of this shift is the landmark pre-let deal completed by CBRE on behalf of Lloyds Banking Group that will see its existing Edinburgh headquarters at Port Hamilton in the heart of the city’s financial district transformed into a state-of-the-art innovation hub. The 21-year term agreement marks one of the largest real estate deals ever undertaken by the Group in Scotland, representing its commitment to the city’s future.

The Port Hamilton deal is also a powerful reminder of the changing expectations of occupiers. As companies increasingly prioritise sustainability and employee wellbeing, there is a growing demand for office spaces that are not only functional but also forward-thinking in their design. The focus on sustainability, whether through energy-efficient building practices, wellness-focused interiors, or the overall environmental impact of a building, is now a top priority for occupiers. Lloyds’ commitment to making Port Hamilton one of the most sustainable office buildings in Edinburgh exemplifies this trend and is indicative of what businesses can expect from new office developments in the future.

However, securing such spaces requires careful planning and foresight. Businesses that wait until the last minute to find space will find themselves limited in their options. Last year, Edinburgh saw a remarkable amount of lease regears - 600,000 sq ft compared to 850,000 sq ft of new lettings. Pre-letting is no longer just for the largest occupiers; it has become a strategic tool for many businesses looking to secure the best possible space in a market that is increasingly constrained.

Currently, there are only a handful of schemes in the development pipeline, with just 650,000 sq ft of new Grade A space that could be delivered in 2027/2028. This is only enough to satisfy about 2.5 years’ worth of demand in the city.

However, two key developments are worth noting: Haymarket Yards and Exchange Place One. Both have detailed planning consent and are set to deliver prime office space in the coming years, with Haymarket Yards offering 185,000 sq ft and Exchange Place One adding 120,000 sq ft. Both are prime pre-let opportunities that occupiers must act on well in advance to secure space in these sought-after buildings.

The challenge now is ensuring Edinburgh’s Grade A office supply keeps pace with demand. Without a strong pipeline of high-quality office space, the city risks losing businesses to out-of-town locations or competing cities with more readily available, Grade A options. It will also hinder ‘inward’ movers into the city. In my opinion, future-proofing such supply requires a combination of robust funding models, streamlined planning consent, and incentives to attract investment and drive development. Importantly, this requires collaboration between public and private sectors.

This will unlock new opportunities, accelerate delivery, and maintain a sustainable flow of best-in-class office stock, all of which are key for Edinburgh to retain its competitive edge.

Angela Lowe, Senior Director, Head of Office Agency at CBRE Scotland