Edinburgh’s Office Stock 2010 :. current characteristics and recent trends . Planning Information, Services for Communities, City of Edinburgh Council March 2013 Edinburgh’s Office Stock 2010 : current characteristics and recent trends CONTENTS : 1 Summary findings 2 Introduction paras. 1 – 4 3 Definitions and sources paras. 5 – 10 4 Scope for further research paras. 11 – 14 5 Total floorspace and trends paras. 15 – 20 6 Geographical distribution paras. 21 – 40 7 Unit sizes paras. 41 – 49 8 Vacant office space and vacancy rates paras. 50 – 58 9 Business activity of office occupiers paras. 59 – 70 10 Listed building status paras. 71 – 74 11 Age of property / date of construction paras. 75 – 80 12 Losses from office stock paras. 81 – 89 Appendices : 1 Listing of larger office buildings 2 Listing of larger office occupiers 3 Listing of major losses of office space Summary findings Total floorspace and development trends y As at 2010 there were 1.93 million sq.m. of office floorspace in Edinburgh (excluding offices ancillary to other activities such as hospitals, colleges, research laboratories) y This represents a 63% growth from the 1.18 million sq.m. available in 1986. y Much of the additional space was developed between 1989 and 2003. The total stock only grew by 3% between 2004 and 2010, as the rate of new development declined while losses from offices to other uses gathered pace. y Development of new offices, through new build and change of use, fell from an average of 62,000 sq.m. per year pre-2004 to 40,000 sq.m. per year during 2004-2010. In contrast, conversions and redevelopment away from office use are estimated to have grown from 24,000 sq.m. to 30,000 sq.m. per annum. Location y Over the last 20 years a major new office hub has emerged at Edinburgh Park / South Gyle on the western outskirts of the city, close to the airport and trunk road network. Some growth has also occurred in Leith, anchored by the Scottish Government at Victoria Quay. However, Edinburgh city centre remains the primary office location and commands the highest rents. y The City Centre (as defined in the new Edinburgh Local Development Plan) is home to 45% of the city’s office space, with a further 14% at Edinburgh Park / South Gyle, 10% in the wider Leith area, and 5% in the Second New Town / Canonmills area. y The centre of gravity for Edinburgh’s city centre offices has shifted markedly westwards towards the new office quarter at The Exchange / Fountainbridge / Haymarket. This area now has 13% of the city’s total office provision, compared with just 3% in 1986. Meanwhile the First New Town’s contribution has fallen from 17% to 12% y 38% of the office stock falls within the boundaries of the Old and New Towns of Edinburgh World Heritage Site, while a further 15% lies within 250 metres of the boundary. y 51% of the stock is located within areas of very high public transport accessibility. Size distribution – premises, buildings, occupiers y 49% of office premises are smaller than 100 sq.m.; however nearly half of all office space is in premises larger than 2,000 sq.m. y In 2010, there were 333 office buildings with a floorspace larger than 1,000 sq.m., and these provided 71% of the total floorspace. y 94% of businesses or organisations in the city occupy office accommodation extending to less than 1,000 sq.m.; but the 207 organisations which occupy more than this amount account for nearly two-thirds of the total floorspace provision. Well over one-third of the total is occupied by just 16 very large private and public sector organisations. Vacancies y Over 300,000 sq.m. of office space was recorded as unoccupied in 2010. y The office vacancy rate then stood at 16%, compared with 11% in 2004 and 6% in 1986. Growing amounts of outdated space co-inciding with the economic downturn are likely to have contributed to this. These figures may under-state the scale of unused space, as additional space may be occupied but not used productively. y Vacancy rates are above average in listed properties and properties dating from the 1960s and 1980s. Nevertheless, 34% of the total unoccupied space was in buildings less than 20 years old (i.e. built 1990 onwards) y In volume terms, the largest amounts of vacant stock in 2010 were in the First New Town and Edinburgh Park / South Gyle (each with more than 40,000 sq.m. unoccupied). Business activity y Four key business sectors together accounted for 71% of occupied space in 2010: (i) financial services; (ii) business services (legal, accountancy, management consultancy etc.); (iii) creative & cultural (advertising, media, architecture, design etc.); and (iv) public administration. y Public administration was the biggest sector in 1986, with 30% of the total. However, this declined to just 19% by 2010, with a real reduction in floorspace. For a long period during the 1990s and early 2000s the financial services sector was the dominant force in the demand for new office space, with its share growing from 19% in 1986 to 29% in 2010. y More recently, business services have come to the fore as a key driver of demand. Their share of total floorspace in 2010 was 12% - a slight rise from 11% in 1986. The fastest growing sector, though from a lower base, has been the creative and cultural sector (11% in 2010 cf. 4% in 1986). Listed building status y The proportion of office space in listed buildings fell from 52% in 1986 to 33% in 2010. Since 2004 the total amount of listed office space has also been in decline. Age / date of construction y Construction date has been researched and analysed for 90% of the city’s office space. y More than 38% of office space in the city is in buildings constructed since 1990. y A further 16% was built between 1960 and 1989, and potentially some of this may soon need replacing by premises which are more suited to modern requirements. y At the other end of the age spectrum, 32% dates back before 1918, including 18% from the pre-Victorian era. Again, it is likely that some of this will not remain suited to office use. Losses from office stock y Although there have been substantial additions to the office stock over the last 25 years, these have been offset by losses, with losses actually exceeding additions in some recent years. y Between 2000 and 2011, 33% of ‘outflows’ from the office stock were pre-Victorian properties. Conversion to other uses accounted for virtually all of these (i.e. retaining the building shell but with varying degrees of internal alterations to suit the new use). y However, 28% of losses were built as recently as the 1970s and 14% in the 1960s. A high proprtion of these took the form of wholesale redevelopment. y Housing was the replacement use for 48% of the office space lost between these dates, with hotels and other visitor accommodation accounting for a further 24%. Retail and educational uses have also taken over significant office space, although lagging well behind residential and hotels. Introduction 1 Edinburgh is one of the UK’s most important office hubs, with an economy that is highly dependent on office accommodation, and an office estate that contributes to the economy in its own right in terms of property management and maintenance. Furthermore, offices have a significant impact on the wider environment, exerting major influences over (for example) traffic generation, energy consumption, design quality and the overall quality of the public realm. Larger concentrations of offices may host very substantial daytime populations which support surroundings shops and other services. 2 Despite their importance, relatively little information has been available until now on the characteristics of Edinburgh’s office stock, even to the extent of uncertainty what the total stock is. This contrasts with the situation for other property sectors, such as housing, shops and hotels, where much more comprehensive is available. 3 An understanding of the city’s office stock is an important starting point in helping to assess future requirements for office space. For example, it is helpful to know how much space is occupied or vacant, which employment sectors (and individual organisations) generate the greatest demand for space, how much space is located in the prime locations, and what the age and quality of existing premises is. Whilst there are records of new developments which have added to the stock over the last quarter of a century, this also needs to be complemented by a better insight into outflows or losses from stock. 4 In order to fill these information gaps, the Planning Service has compiled a database of office premises within the city, based on a combination of planning records, the commercial valuation roll, commentaries by local property agencies, on-site inspection and on-line research. This report summarises some of the key characteristics of the office stock derived from an analysis of this database. Definitions and sources 5 The database primarily focuses on the position as at 2010, which is the date of the commercial valuation roll extract provided by the Lothian Valuation Joint Board (LVJB). This extract also provided the basis for an analysis of the city’s retail premises, which is already available on the Council’s web site at : http://www.edinburgh.gov.uk/info/20120/planning­ development_activity_monitoring/1413/development_activity_monitoring/7 However, historic valuation roll data from 1986 and 2004 has also been incorporated into the database, and this makes it possible to identify trends in the amount, location and occupancy of offices over a 24 year period.