This is not about opposing alternative uses for buildings. The city should absolutely support the conversion of obsolete space into more viable assets. However, ensuring a thoughtful balance in core locations is essential for the city’s long-term prosperity.
Edinburgh’s city centre is at a pivotal juncture. While the Scottish capital has long been a magnet for both business and tourism, an increasing number of prime office conversions is disrupting the balance that makes Edinburgh a dynamic and diverse economic centre.
Protecting Edinburgh’s office space
The nature of work has evolved since the pandemic with hybrid and flexible working becoming more prevalent. Rather than diminish the need for office accommodation, for many occupiers these new ways of working have reinforced the need for a high quality office environment to compliment hybrid working arrangements. Companies are now looking for well located, well-designed office space that fosters collaboration and innovation.
Edinburgh’s central business district (CBD) has long provided this, particularly in key locations such as St Andrew Square, Exchange District and the West End.
Yet, Edinburgh’s office market remains constrained with a worrying shortage of prime Grade A space, which is subsequently impacting business expansion and relocation decisions. With a lack of new development, the case for refurbishment is strong with almost 40% of take-up in 2024 for refurbished office stock.
Significant competition
Despite this, and even against a backdrop of positive sentiment, office developers in Edinburgh face a significant challenge. Essentially, they are struggling to compete when it comes to acquiring vacant offices to either refurbish or redevelop.
Over the past 18 months, over 220,000 sq ft of the prime office pipeline has been taken out of the market, all of which was sold for hotel conversion. While this demonstrates the significant appetite from hotel operators and enhances the city’s tourism appeal, it also raises considerations about maintaining sufficient prime office stock to support a dynamic economic centre. Especially as recent sales were not for tertiary-located offices, but prime sites that, if developed, would command top-level rents.
Our sale of Edinburgh One, located on Morrison Street in the heart of the Exchange District is a good example. It attracted strong interest from both office and hotel developers but ultimately sold unconditionally for hotel conversion.
Other instances include Capital House, 28 St Andrew Square and 9-10 St Andrew Square. These are all prime locations that cannot be easily replicated, meaning businesses may need to start looking elsewhere. Ultimately, this highlights the importance of creating a planning framework that supports a well-balanced approach to development.
A vision for the future
At present, there is currently no specific planning policy preventing the conversion of office buildings. Although the National Planning Framework 4 (NPF4) assumes the retention of existing buildings and encourages their conversino for alternative uses where office space is deemed unfit for purpose, there is no explicit protection of prime space in local planning policy. However, introducing measures to safeguard strategically important office locations could help maintain a thriving business environment alongside the city’s growing visitor economy.
By fostering collaboration between local authorities, planners, developers and investors, Edinburgh can continue to evolve in a more balanced way that supports both tourism and business needs.
Additionally, if exit yields tighten for office developers, this will make them more competitive when bidding for properties. Afterall, the issue isn’t a lack of appetite as evidenced by the aforementioned sale of Edinburgh One.
Moving forward, we need to consider if we want Edinburgh City Centre to be a place that just entertains its visitors or how we can ensure it can also remain a vibrant place to work, visit and invest.
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