Edinburgh and Glasgow office rents top new record as post-pandemic ‘flight to quality’ gathers pace

The jump in rents comes as the “flight to quality” continues to gather pace, with businesses reviewing their property requirements post-pandemic and despite wider economic uncertainties.

Knight Frank’s Scotland Report 2025 found that prime rents in Edinburgh have achieved £46 per square foot, exceeding the £45 per sq ft milestone reached by the end of last year.

Meanwhile, Glasgow surpassed £40 per sq ft this year, achieving £41.50 per sq ft, and Aberdeen has remained stable at £32.50 per sq ft, according to the property consultancy’s latest findings. Edinburgh rents have increased by 30 per cent since March 2020, and the onset of the Covid-19 pandemic, while in Glasgow they have risen by 28 per cent, Knight Frank noted.

One of the main contributing factors is said to be occupiers concentrating their interest on the “best available space”. New or Grade A accommodation accounted for around two-thirds of last year’s take-up of office space in Scotland, with a particular emphasis on “high-quality, amenity-rich and well-located environments” with flexibility in both lease terms and space usage.

At the same time, the study notes that there is growing evidence that occupier requirements are contracting. While deal volumes in Glasgow and Edinburgh rose 30 per cent and 13 per cent during 2024, respectively, transactions below the 10,000 sq ft level accounted for 91 per cent of the Scottish market, as flexibility has become a bigger priority than total square footage.

Toby Withall, office agency partner at Knight Frank, said a “clear trend” in occupier requirements was emerging.

“They are increasingly prioritising buildings which offer amenities and flexibility,” he said. “The space they use needs to be capable of adapting to fluctuating workforce sizes and the uncertain economic backdrop we have seen over the past couple of years, which inevitably has an impact on business performance.

“From a landlord perspective, anticipating and responding to those needs with the best possible location and high-quality, flexible, and sustainable spaces is essential. These features are no longer optional - they are critical to attracting and retaining occupiers. That said, challenges remain around development viability, with further growth and sharper pricing potentially required to bridge that gap fully.”

He added: “For occupiers, the balance is more around aligning their space with evolving work patterns. There is growing emphasis on environments that support wellbeing, collaboration and sustainability - and we have seen offices that meet those needs experience stronger demand. We only see that trend accelerating as the workplace continues to evolve.”

In June, the firm reported that Scotland’s commercial property market attracted some £750 million of investment in the first half of 2025, amid geopolitical tensions and a changing policy backdrop.

The total was down by a fifth on the £925m average for the previous five years, but broadly in line with the trend seen across the UK. That figure includes a particularly strong year in 2022, which if discounted, produces an average of £769m, much closer to the 2025 first-half result.

Hotels were found to be the top-performing asset class, with £213m of investment. That was the second highest figure for the sector during the first six months of the year since 2020, behind only 2024’s £235m. Retail was second with £207m-worth of transactions, followed by offices at £152m.

Private investors were the most active buyers during the first half of the year, accounting for 40 per cent of investment - the highest share for the six-month period in recent years. International investors were second with 32 per cent of the total. Institutions accounted for 19 per cent, while real estate investment trusts (REITs), listed property companies and occupiers made up the remaining 9 per cent.

Resilience

Alasdair Steele, head of Scotland commercial at Knight Frank, said: “Leasing activity has continued to show resilience, particularly in the major commercial centres where performance is increasingly concentrated within a limited pool of high-quality assets. Occupiers are acting decisively when the right product becomes available, with standout transactions reflecting pent-up demand from organisations that can delay commitments no longer.

“Investment volumes for 2025 so far reflect broader macroeconomic headwinds, yet deal interest continues - particularly for prime, well-let assets. Buyers are selective, and due diligence timelines have lengthened, but interest persists.

“The consultation on creating tax parity between commercial properties in England and Scotland should also provide further support to the market,” he added. “Divergent growth has been one of the main trends for the Scottish commercial property sector.

“The market remains responsive for landlords and vendors holding high quality, well-let assets in prime locations. For others, adaptability, realistic pricing, and a willingness to align with the evolving demands will be the defining focus of attention.”

The firm’s report in June coincided with research from Lismore Real Estate Advisors and its latest review of the Scottish investment market, covering the second quarter of 2025.

It noted that transaction volumes between April and June appeared “relatively healthy” at £296m, representing an increase of 9 per cent, compared to the same period last year. However, it pointed out that two transactions accounted for 48 per cent of total market activity in the latest quarter, with volumes 21 per cent below the five-year average - broadly in line with Knight Frank’s findings for the first half.

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