Crane Survey

Edinburgh 2010
Introduction

Development activity in Edinburgh remains muted as

the economy struggles to recover from the recession.
This is particularly evident in the office sector with just
one office scheme under construction this survey.
In order to provide a more comprehensive snapshot
of development in Edinburgh city centre, we have
widened the scope of the Crane Survey to include all
commercial and non-commercial development activity.
While office development activity might be limited,
there are currently 16 developments under construction
in the city centre, largely comprising residential schemes.

While office
development activity
might be limited,
there are currently
16 developments
under construction
in the city centre,
largely comprising
residential schemes
Quatermile II by Gladedale Capital Group

2
Offices

The current lack of office development activity is

testimony to the severe impact of the economic
downturn on the UK property markets. In 2009
occupiers were cautious on the whole and delayed
relocations, resulting in weak demand and low take-up
levels. This, coupled with a lack of available finance,
resulted in development activity grinding to a halt
across the country. Edinburgh was no exception,
with speculative developments placed on hold in late
2008 and 2009. In the only development scheduled
to finish this year, J Smart & Co have completed
Bridgeside House on MacDonald Road, delivering
24,000 sq ft of speculative office space in May 2010.

The only office development under construction and

scheduled to complete next year is the 55,000 sq ft
office building in the Shawfair Business Park, which is
100% pre-let to the Scottish Qualifications Authority.
The total of the 2010 and 2011 delivery equates to 12%
of the 2009 total (640,000 sq ft), with the 2010 volume
being the lowest delivery in nearly a decade. The Cube by Kilmartin and IVG

Development pipeline

Sq ft

700,000

600,000

500,000

400,000

300,000

200,000

100,000

0 Source: Drivers Jonas Deloitte

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Completed Available U/C Let U/C 2000 - 2009 Average

Crane Survey Edinburgh 2010 3

The high quantity of space released onto the market
last year combined with a slowdown in demand led to
a sharp increase in office availability during 2009.
More than two thirds of the total office space coming
online from 2009 to 2011 is still available, as the table
below illustrates.
Shawfair Business Park, and NHS Lothian taking
38,700 sq ft at Waverley Gate. Demand from the
financial services sector remains limited following the
economic crisis. Despite the increase on last year’s half
year take-up levels, total take-up for 2010 is expected
to remain below average.

Availability has reduced since the end of 2009 and
currently stands at 7% of total stock. The low delivery
pipeline coming forward will lead to a dearth of new
office supply in 2011 and 2012 and should reduce
availability levels further.
2009 saw low levels of take-up, with only 450,000
sq ft office space leased, 200,000 sq ft less than in 2008
and well below the five year average of 610,000 sq ft.
Only 16% of the new space delivered in 2009 was taken
up and included lettings to Hymans Robertson, Wood
MacKenzie and Aecom, totalling 104,000 sq ft.
Demand in 2010 has remained weak, with 270,000
sq ft of office space taken up during the first half of
the year. Comparatively this figure is 20% higher than
over this period last year with demand largely driven
by public sector requirements, including the 55,000
sq ft pre-let to the Scottish Qualifications Authority at
Lease transactions in the past 12 months have been
heavily weighted to smaller lettings (sub-5,000 sq ft)
with a consistent churn of occupiers exercising their break
options. A total of 70 transactions have been concluded,
with an average deal size of 3,800 sq ft, marginally larger
than the 3,300 sq ft of the year before.
Reduced demand combined with a high volume of
new completions last year has created a competitive
environment for landlords looking to attract tenants.
This has resulted in rental levels falling 10% since their
peak in 2008 to £26.00 per sq ft, with rent-free incentives
moving out to a maximum of 36 months on a straight
10-year lease. This rental decline is less than the fall
recorded in the early 1990s recession when rents fell
£5 per sq ft (20%) in four years. We expect rental levels
to hold stable and incentive packages to reduce by the
end of 2011 as availability reduces and in the absence of
prime speculative space.

Scheme Name Total space Remaining space Completion

(sq ft) (sq ft)

Connect Edinburgh Phase 2, Newbridge 19,000 11,800 Q2 2009

Tanfield, Canonmills 191,000 171,000 Q2 2009
1 Exchange Place, Semple Street 109,000 96,500 Q2 2009
2 Exchange Place, Semple Street 59,600 21,500 Q2 2009
3 Exchange Place, Semple Street 27,400 9,700 Q2 2009
Ratho Park, West Edinburgh Phase 2 22,300 22,300 Q3 2009
Westport 102 94,000 84,000 Q3 2009
Quartermile II 52,700 16,000 Q4 2009
The Cube, Leith Street 65,000 52,200 Q4 2009
Bridgeside House, 97-99 MacDonald Road 24,000 24,000 Q2 2010
Shawfair Business Park 55,000 0 Q3 2011
Total 719,000 486,700

4
Hotels

As highlighted in Deloitte's recent report Hospitality
2015: Game changers or spectators, the UK hospitality
sector has been heavily impacted by the recent recession
and the continued economic uncertainty. Hotel demand
fell four times faster than GDP during the recession,
the most dramatic fall over the past century.
Demand in Edinburgh has fluctuated this year, but
overall occupancy levels are holding up compared to the
national average with 73.7% occupancy recorded for
hotels in the city by mid-July 2010 compared with the
72.3% recorded in 2009, according to STR Global Ltd.
Corporate occupancy demand in the city has in recent
months been driven by the public and banking sector,
while Brits choosing to holiday in the UK contributed to
the strong leisure demand.
Demand in Edinburgh has been stronger for budget and
mid-level accommodation which is reflected in current
development activity within the city centre. Travelodge,
the budget hotel operator, completed two new hotels in
Edinburgh recently: in April a 115-bedroom hotel opened
on Craigmillar Park and in August a 96-bedroom hotel
opened at 3 Waterloo Place. These two new hotels form
part of the operator’s plans to open 26 new hotels in

Hotel demand fell the UK this year. The expansion will take Travelodge’s UK
portfolio to more than 400 properties and will include

four times faster than new hotels in London, Edinburgh, Aberdeen, Colwyn Bay
and Morecambe.

GDP during the The only hotel development currently under construction

recession, the most in the city centre is the Premier Inn on Princes Street.
The 97-bedroom hotel will include nearly 30,000 sq ft of

dramatic fall over the retail space on the ground level which has been pre-let
to the fashion retailer New Look. The development is

past century scheduled to complete in 2012 and is the first hotel to be

developed on Princes Street since 1955.

Occupancy

90

80

70

60

50

40

30

20

10

0 Source: 2010 STR Global Ltd

United Kingdom Regional London Edinburgh Glasgow

2009 2010*

*2010 year to date, ending 10 July 2010

Crane Survey Edinburgh 2010 5

Residential

Edinburgh was not immune to the residential market
downturn; 17% was wiped off the average house
price in the city in just 18 months and sales volumes
fell 76% from peak to trough. In more recent months
the market has started to show signs of recovery,
with sales volumes in the city recording an increase of
17% year on year according to Registers of Scotland.
However, this is still someway from the level seen at
the top of market.
The availability of mortgage finance remains one of
the key barriers to restarting momentum within the
residential market. Many potential purchasers are
finding themselves excluded from the market due to
the fact they can’t obtain a mortgage. The last 12
months has seen conditions improve with lending up
22% across Scotland. However, this is from a low base
and in reality lending still remains tight and a long way
from the levels seen pre-downturn.

Number of residential dwellings completed in Edinburgh

No. of units
900

800

700

600

500

400

300

200

100
Source: NHBC,
0 Drivers Jonas Deloitte
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2006 2007 2007 2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010

Starts Completions Start average Completion average

Development pipeline

No. of units

800

700

600

500

400

300

200

100
Source:
0 Drivers Jonas Deloitte
2010 2011 2012 2013 2014 2015

6
A previous phase of CALA's East Fettes development
The new-build residential sector was one of the first
to feel the effects of the ‘credit crunch’ with private
housing completions falling 68% between 2007
and 2009 in Edinburgh. Several schemes have been
mothballed as they no longer proved financially viable
in the current market. As a consequence development
activity remains below average despite attempts by
some developers to maintain output. Notably some
of they key housebuilders have refinanced projects in
order to get back on site. Despite a fall back in activity,
the residential sector is currently the dominant driver
in Edinburgh’s development activity. Our Crane Survey
records there are 14 schemes under construction, all of
which are located on the periphery of the city centre.
Regardless of this bout of activity, residential
construction in Edinburgh remains someway below
the long term average. Our Crane Survey analysis
shows that four developments are scheduled to
complete this year, delivering 606 new units between
them. A further 1,600 units are currently under
construction and scheduled to complete in the next
five years. All the schemes currently under construction
are being brought to the market by major players.
Three developers alone are responsible for 50% of
schemes underway in our Crane Survey area. These are
Barratt who have three schemes under construction,
Miller Homes with two schemes and CALA who also
have two schemes currently underway.
As with other major cities, construction activity is
dominated by flatted developments. Our survey records
one exception, the Graysmill Gait development by
Miller Homes. This is the only development currently
underway solely comprising houses, and is due for
completion later this year.
The slowdown in new housing starts and completions
as published by the NHBC is expected to lead to a
housing shortage in Edinburgh going forward. The
Scottish Government recognises the future challenges
facing the residential sector and has set up the
National Housing Trust (NHT) to deliver new homes
at 80% of the average market rent as part of a bid to
tackle the current shortage of affordable housing in the
city. The NHT has the potential to restart development
activity on stalled housing sites. This follows in the
footsteps of the Homes and Communities Agency Kick-
start programme which successfully restarted stalled
sites across England over the past 24 months.
Crane Survey Edinburgh 2010 7
Student accommodation

Edinburgh is home to five universities and over 43,800 full
time students, making it one of the largest student centres
in the UK according to the latest data from the Higher
Education Statistics Agency (HESA). The city attracts a large
number of international students, and although the total
student population has not increased significantly, the share
of international students has increased by 24% since 2002.
In contrast to the office sector, investor and developer
appetite in the student housing market has been increasing
throughout the downturn. The rationale for the sector’s
attractiveness tends to include the strong rental growth
that has been recorded, as well as the non-cyclical nature
of the stock as demand continues to increase in line with
increasing student numbers.
There are currently 9,350 purpose-built student
bedspaces in Edinburgh according to our student
accommodation database. The vast majority of this
There are currently three new student housing schemes
completing in Edinburgh in time for the start of the
new academic year, adding 604 new bedspaces to the
market. Two IQ schemes are located on Grove Street
and Dundee Street and will provide a mix of unit types,
including studios, cluster bedspaces and one bedroom
apartments. The third scheme is on Nicolson Street and
was developed by Lacuna Developments and Watkin
Jones. This development is pre-let to Edinburgh University
for 20 years.
Edinburgh continues to be an attractive location for
student housing investment due to the large student
population, the current shortage of student private
bedspaces and the higher than average share of
international students.
Current student bedspace supply by type

stock is owned by the universities, with the University of % No. of units

Edinburgh accounting for 54% of the total.
100
90
Only 4% of the stock is privately owned and available
80
for direct letting, which is considerably below the
national average where a third is privately owned and 70

two-thirds university owned. 60

50
The current provision of purpose-built bedspaces in 40
Edinburgh is heavily dominated by cluster accommodation 30
which accounts for 98% of the total stock. Studios only
20
account for 2% of the total bedspaces and nearly all the
10
studios in Edinburgh are operated on a direct let basis.
0
With over 43,800 full time students in Edinburgh and only
Edinburgh UK
9,350 purpose-built student bedspaces, this means that
three quarters have to find alternative accommodation. Other Other rented accommodation
Parental/guardian home Institution maintained property Source: HESA,
We estimate Edinburgh has a bedspace ratio of 4.7 Own residence Private-sector halls Drivers Jonas Deloitte
students per purpose-built bed, which is higher than the
UK average ratio of 3.7. Whilst this does not necessarily
constitute an under supply of bedspaces, it does suggest
there might be demand for more purpose-built halls.

Rents in Edinburgh are at the higher end of the scale.

There are currently 9,350
The average self catered headline rent in Edinburgh
is £105 per week, which is 16% higher than the UK
purpose-built student bedspaces
average (excluding London). There are currently no
direct let schemes available for less than £120 per week.
in Edinburgh according to our
This is due to the fact that most of the private student
accommodation comprise studios which attract higher
student accommodation database
rents (and also greater returns) for developers.

8
Conclusions

Student housing development on Grove Street developed by Watkin Jones

As predicted in our previous Crane Survey, the
Edinburgh office market has struggled during the
past year as demand all but disappeared from the
financial services sector, previously its main driver.
Development activity has ground to a halt with just
one development completing this year and just one
currently under construction.
Development activity is now largely dominated by
residential projects, with a mixture of residential types
under construction on the periphery of the city centre.
Family housing remains in short supply however, and is
It is unlikely that construction activity in general will
increase significantly during the remainder of the year;
the economic recovery remains uncertain and fears
of a double-dip recession have increased. Demand is
expected to remain weak and developers will continue
to seek pre-lets prior to starting construction. However,
the current low levels of development supply should aid
the market recovery as economic growth and stronger
demand translates into shortages of prime stock.

Current low levels of development

expected to put pressure on the second hand housing
market in the short term.

Interest from both investors and developers in supply should aid the market
recovery as economic growth and
the student housing market has been increasing
throughout the downturn and three student

stronger demand translates into

accommodation projects are completing in the city
at the time of going to print. With a large student

shortages of prime stock

population and an increasing international student
population, demand in the city remains strong.

Crane Survey Edinburgh 2010 9

Development map

Edinburgh Crane Survey Map

D

OA R

LOG
ON

PI L
PL. 17 15

BEA
WARRIST

IE

RIG
E ITH

VER
ERL IN

GRE
VE

STR
INV

HAL
RL

EN
EIT

E
L RD

ET
H

R
RO

.
OAD
W
12 25 ROYAL BOTANIC
GARDEN AD
13 RO 4
ON

MC
E ET
HT

DO
STR
CANONMILL
EA S

D
UG
22

OA

N AL
T
O

ER
TF

ON
BR

D
VU
LE

RO
BRAN
ET T

REM

L
BE

AD
E

CLA
S AV

23

DON
D
N ROA N
GTO .

AN
ENU

OW
PL

BE
RIN PET

T
CAR RE HO

NA
LLE
ERR.
EY ALBERT ST
E
FET

REET

ND
VU

AL
E
T

DUN
N ROW
ES A

ES
CR

DERSO
DUN

TR
EW

HEN

DON
VEN

STREET

EE
ER

NDON
DAS

T
LO BR
EAST
D

UN

ALD
RAEBURN PLACE SW
E

.
PL

ICK
STR
N

26 OW STREET
TO

ANK R
ST.
HAMIL

ELY B
EET

BR
COM
G ST.

OU
CIRCUS T KIN

GH
GREA

DUB
AL

TO
ROY

19

LIN S

N
LONDO

ST
N ROAD

R
TREE
20

EE

K
T
HOW

L
WA
CE
T K PLA
E ST.

YOR

TH
W
AY T RO
QU 24
HERIO

LEI
OR 3
M

QUEENSFERRY ROAD W
EE T RO
N ST

NS HERIO
FE T
TREE
HAN

EN S
. AN

RR
QUE 6
ST. ANDREWS
YT

OVE

DREW

L
EP .
ER

SQUARE REG
LI
R

PL.
N CA
AC

RLOO
AINS

EN
STRE

S ST.

WATE T RO D
E

EET A
E STR
STLE

RG
GEO
E

CHARLOTTE
T

NORT

CARLTON
ROAD
SQUARE
STRE

H BR

NEW ST.
E

T
AD TREE TE
T

EAST MARKET ST.

BELFORD RO 1 CES S N GA
IDGE
THE M

PRIN O
JEFFRE
Y ST. CAN
T
TREE
OUN

KET S
MAR
D

ST. M
SOUT

T
STREE
HIGH
ARY

D
ROO
EDINBURGH HOLY
H BR

’S

CASTLE
2
IDGE

E
AC CE
PL COW GATE
LOTHIA

K RA
IC ER
JOHNSTO NT
DW
AN
T
REE
N

ST
SH ERS
ROAD

MB
NICO

PLEASAN

QUEEN’S DRIVE
T CHA
21 P OR
EST 9 H
LSO

W
MORRISON STREET
CE

HAYMARKET TERRACE
N ST.
MOR

10
POTT

27 8
RIS

CE
ERRO

LAURISTON PLA
ON
LIN

11
K

G E
CH BRID UNIVERSITY
OA
CH
RUS

IN
AD

TA
AP

R
PP UN
RO

EL
SELL

A FO
ST.

T
LRY

ES
CL

ST.
R

W
ER
DA

GI
OAD

LE

LM
KS
BU

ON

OR
E

ET
CC

E
7
A
TR
BRUNTSFIELD PLAC

TRE
PL
RD
LEU

AC
EET

ES
’S

E
CH

E
STR

ND
ST.

DU
E ET
LEA

14 16 18 5
MIN
GT

HENDERSON
T. MELVIL
ON

LE DRIV
E
TER
RA
CE

New start Under construction Complete

10
 No Name / address Developer(s) Main use Phased Total size in Completion Comment
sq ft / units date

City Centre - Under construction

1 121-123 Princes Street Deramore Hotel 97 bedrooms Q2 2012 Premier Inn. The development also includes
30,000 sq ft of retail space which is pre-let
to New Look.
City Centre - Completed

2 George the IV Bridge Kilmartin / HBOS Hotel 136 bedrooms Q2 2009 The five star Missoni Hotel development is
complimented by retail and leisure space,
which includes a Pizza Express and a Bank
of Scotland branch.
3 The Cube, Leith Street Kilmartin / IVG Office 65,000 Q4 2009 12,300 sq ft let to Glenmorangie
post completion.
4 Bridgeside House, J Smart & Co Office 24,000 Q2 2010 Built speculatively.
97-99 MacDonald Road
5 41-43 Craigmillar Park Teague Construction Hotel 115 bedrooms Q2 2010 The Travelodge opened in April 2010.
6 3 Waterloo Place Chris Stewart Property Group Hotel 96 bedrooms Q3 2010 The Travelodge opened in August 2010.
7 IQ Scheme at 114 Dundee IQ / Watkin Jones Student 314 beds Q3 2010
Street, Fountainbridge Accommodation
8 IQ Scheme at 69 IQ / Watkin Jones Student 205 beds Q3 2010
Grove Street Accommodation

Edinburgh Exchange / Haymarket - Under construction

9 Lacuna development, Lacuna Development Ltd / Student 85 beds Q3 2009 This scheme is pre-let to Edinburgh University
Nicolson Street Watkin Jones Accommodation for 20 years.

Edinburgh Exchange / Haymarket - Completed

10 Westport 102, Kenmore / HBOS Office 94,000 Q3 2009

Lady Lawson Street
11 Quartermile II Gladedale Capital Group Office 52,700 Q4 2009 The majority of the space is pre-let to
Morton Fraser LLP.

Edinburgh Periphery - Under construction

12 Optima, Ferry Road Redrow Residential 300 Q3 2010 An apartment development.

13 Fusion, Forthquarter, Barratt Residential 176 Q3 2010 An apartment development.
West Granton Road
14 Graysmill Gait, Craiglockart Miller Homes Residential 10 2010 This development consists of 5-bedroom
detached houses.
15 Bonnington Miller Homes Residential 120 Q4 2010 An apartment development.
16 West 1, Slateford Road Barratt Residential 201 Q2 2011 An apartment development.
17 Q, Newhaven Place Barratt Residential 105 Q2 2011 This development consists of townhouses
and apartments.
18 Shawfair Business Park, Buccleuch Office 55,000 Q3 2011 100% pre-let to the Scottish
South Edinburgh Qualifications Authority.
19 Bughtlin Market, East Craigs Mactaggart & Mickel Residential 72 Q4 2011 The project consist of townhouses and
apartments. 18 apartments allocated as
affordable housing.
20 Blackhall, Hill Park Mactaggart & Mickel Residential 54 Q4 2011 This development consists of townhouses
and apartments.
21 Pinkhill, Corstorphine Road Taylor Wimpey Residential 66 Q3 2012 Two thirds of the development is
now complete.
22 Varsity, Telford College Miller Homes Residential 329 Q3 2012 This development is spread across three
apartment blocks.
23 East Fettes CALA Residential 69 2012 This development consists of two and three
bedroom apartments.
24 Grovewood Hill, CALA Residential 239 2013 This is a mixed residential development
Craigmount consisting of detached houses, mews
houses, townhouses and apartments.
25 Strada, Ferry Road Taylor Wimpey / Bett Residential 122 Q4 2014 This is the final phase of a 646 unit
apartment development.
26 QMU site, Clermiston Persimmon Residential 312 2015 The scheme will consists of 11 terraced
houses and an apartment block.

Edinburgh Periphery - Completed

27 Ratho Park Phase 2, EDI Office 22,300 Q3 2009 This phase comprised an office and
West Edinburgh hotel pre-let to Travelodge. Designed to
environmentally friendly standards.

Blue text - indicates new starts this survey

Crane Survey Edinburgh 2010 11

 Ian Lochhead Richard Spence
Agency Valuation
+44 (0)131 535 7094 +44 (0)131 535 7092
ilochhead@djdeloitte.co.uk rspence@djdeloitte.co.uk

Sandy Gilmour Gordon Alexander

Investment Strategic Consultancy
+44 (0)141 504 5693 +44 (0)131 535 7090
sgilmour@djdeloitte.co.uk goalexander@djdeloitte.co.uk

Tim Pankhurst Anthony Duggan

Student Housing Research
+44 (0)20 7303 3890 +44 (0)20 7303 3134
tpankhurst@djdeloitte.co.uk aduggan@djdeloitte.co.uk

This survey is on our website www.djdeloitte.co.uk/research

Crane Surveys are also available for:

LONDON
PARIS
FRANKFURT
LEEDS
BIRMINGHAM
MANCHESTER
GLASGOW

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, and its network of
member firms, each of which is a legally separate and independent entity. Please see www.deloitte.co.uk/about for a detailed description of
the legal structure of DTTL and its member firms.

Drivers Jonas Deloitte is a trading name of Deloitte LLP, the United Kingdom member firm of DTTL.

This publication has been written in general terms and therefore cannot be relied on to cover specific situations; application of the principles
set out will depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or
refraining from acting on any of the contents of this publication. We would be pleased to advise readers on how to apply the principles set
out in this publication to their specific circumstances. We accept no duty of care or liability for any loss occasioned to any person acting or
refraining from action as a result of any material in this publication.

© 2010 Deloitte LLP (trading as Drivers Jonas Deloitte). All rights reserved.

Deloitte LLP is a limited liability partnership registered in England and Wales with registered number OC303675 and its registered office at
2 New Street Square, London EC4A 3BZ, United Kingdom. Tel: +44 (0) 20 7936 3000 Fax: +44 (0) 20 7583 1198.

Member of Deloitte Touche Tohmatsu