The City of Edinburgh is often awarded many accolades. Internationally the city scores highly for its quality of life (2nd), beauty (4th) and dynamism (9th). Within the United Kingdom, Edinburgh is rated for its walkability (1st), green space (1st) and friendliness (1st) (Convention Edinburgh Statistics).

As many other cities are experiencing a resurgence in demand for of city centre living, the popularity of Edinburgh’s centre, a key component of its success, is pushing businesses and households out.

What does this mean for areas beyond the Bypass? Undoubtedly, an increasing role in the city’s future but this comes with challenges, not least how to cater for demand whilst maintaining the quality of life and dynamism which are the city’s attractive attributes.

The migration bonus

Edinburgh benefits from a migration bonus, gaining more people than it loses. Over the past five years (2012-2016) the population has grown by 24,540, exceeding the half a million mark for the first time, and households have increased by 8,010.

Despite this, and recent pick up in development, there have only been 6,200 new homes built which is intensifying historic undersupply. Therefore, it is unsurprising that the surrounding local authority areas are attractive for those seeking a new home. Almost 6,800 people moved out of Edinburgh to the immediate four surrounding local authority areas in 2016 alone, 3,000 more than the number that moved into Edinburgh from the same areas.

So what makes these areas attractive?

Developing suburbia

New residential development beyond the Bypass has given impetus for this migration primarily through the provision of family housing.

Over the past five years there have been 6,500 new homes completed across East Lothian (1,463), Midlothian (2,873) and West Lothian (2,259). Figure 3 shows the scale and location of these additional dwellings. Clearly, the most significant additions have been in areas immediately beyond the Bypass and along key road routes.

Bypass commuting

The Savills What Workers Want survey indicates that 'good public transport connections' was the most important factor for Edinburgh’s workers.

Whilst those living in Edinburgh report higher levels of commuting to work by foot than average, the same cannot be said for those living in the commuter belt. Here road, bus and rail dominate.

As Figure 3 shows, there have been key clusters of development along transport links and whilst bus usage has increased on some routes, so too has traditional congestion.

As the number of residents increases, infrastructure needs further consideration. Edinburgh is ranked the fifth most congested small city (populations less than 800,000 in Europe) according to TomTom Data. Journeys typically take 40% longer than they should due to traffic and take 70% longer during peak times. This places it ahead of London for delays and on par with Rome and Shanghai.

Furthermore, all bar two of the city’s delay hotspots (2016 Q2, latest available) were along the Bypass with particular clustering around the routes connecting to Queensferry Road, Hermiston Gait and the Midlothian area.

Office rentals

Rental pressure and shortage of space in town has consequently seen the number of office leasing deals in the out of town markets more than double from 20 to 53 between 2009 and 2016.

Standard Life has taken a lease of 31,000 sq ft at South Gyle Broadway during the first half of 2017 and we expect to see continued growth in office take up around Edinburgh Park as the airport expands. Rents have consequently risen from £17 per sq ft to £22 per sq ft over the past five years, but still remain at a discount to 2007 levels.

Moving In: Residential v Office

Sites in proximity to the Bypass, and as a result Edinburgh itself, continue to be in high demand, both from a residential and commercial perspective.

A number of large land releases are planned for the West, including Cammo, Edinburgh Park, West Craigs and the Edinburgh Garden District. Supply across these areas will deliver almost 10,000 new residential units over the next 10 to 15 years, but more supply across a variety of tenures will be needed to satisfy growth.

Out of town office space continues to look attractive here too, due to its connectivity to the city centre, Bypass and airport. This will create competition for the most connected opportunities.

^{Source: Scottish Government, Savills Research}