GLOBAL investment manager BlackRock is taking space in one of Edinburgh’s newest office blocks in what is the biggest city-centre letting of a speculative development for almost a decade.
The US firm will occupy part of the first floor and three other entire floors of Exchange Place 1, owned by Scottish Widows Investment Partnership, in Fountainbridge.
BlackRock will double its existing 40,000sq ft of floorspace in nearby Torphichen Street, providing it with enough room to expand its operations.
Nigel Bolton, head of BlackRock in Scotland and head of European equities, said it represented a long-term commitment to Edinburgh.
The company has spent nine months assessing its options and worked with letting agent CBRE in Edinburgh, London and New York to ensure it found the right property.
Stewart Taylor, director at CBRE, representing BlackRock, said: “BlackRock was aware of the likely future shortage of grade-A accommodation in Edinburgh and moved early to consider the options. The firm has worked closely with SWIP this year to agree a transaction that is unlikely to be bettered in the current cycle.”
Darryl Tidd, fund manager at SWIP, said: “This is an important letting for SWIP as Exchange Place is our largest office development in Scotland. We worked hard to deliver commercial terms that fulfilled BlackRock’s business requirements whilst also meeting our client’s targets and objectives.”
Exchange Place, occupying a site behind the Scottish Widows headquarters, is home to a number of blue-chip firms including Hymans Robertson, Wood Mackenzie and Scott Moncrieff. The development is almost fully let, amid warnings that the city will run out of high-quality office space, not least because London-based investors wrongly believe Scottish banks have overburdened the market with empty property since the banking crisis.
A GVA report says that, contrary to such perceptions, the capital is in “urgent” need of new grade-A offices ahead of an expected “churn” of companies coming to the end of long lease agreements. Only two grade-A offices are under construction: Atria, being developed by the city council and part pre-let to wealth manager Brewin Dolphin; and 143 Morrison Street, developed by Ediston Properties.
It is thought both properties are being considered as the headquarters for the Green Investment Bank.
The bank’s chairman, Lord Smith, said the organisation was seeking a headquarters location suitable for hosting world dignitaries, located in the Edinburgh financial district, and which had “green credentials” such as a high rating from Building Research Establishment’s Environmental Assessment Method.
Toby Withall, director of GVA, said Edinburgh office buildings such as Saltire Court on Castle Terrace would have tenants considering a break once their 25-year leases come to an end, although he added not all its tenants there would move on.
GVA’s research says there is only 18-24 months’ supply left to meet the anticipated demand. Although office lettings have slowed in recent years, there have been signs that the market is seeing some demand, such as the move by travel search firm Skyscanner and wealth manager Investec to Quartermile, and the NHS taking 36,000sq ft at West Port. Other offices such as The Cube at Leith Street and Waverley Gate are also near capacity.