Demand for office space in Glasgow relatively buoyant
THE demand for office space in Glasgow looks to be relatively buoyant, according to figures released by commercial property estate agent, CBRE.
Says CBRE, take-up for the city’s office space during the second quarter of this year (April to June) was almost 30 per cent up on the previous quarter (January to March).
That’s equivalent to 95,809 sq ft in the second quarter of the year, which has brought the total take-up for the first half of the year in Glasgow to 169,874 sq ft.
Says CBRE, in a media announcement: “Whilst down on the same period in 2022, the number of deals remains steady, demonstrating that occupiers are still taking space albeit on a reduced size basis.”
The announcement continues: “Notable transactions in the second quarter included a 12,008 sq ft letting to We Are Luxe Ltd at St Vincent Plaza, representing the largest deal of the quarter, 10,424 sq ft at 6 Atlantic Quay to Iomart and 7,294 sq ft to Wizu Workspace at 2 West Regent Street. The sub 5,000 sq ft lettings market dominated once again with 49,302 sq ft acquired across 34 deals.
“Overall supply is down on last quarter, with 2.58m sq ft of office space now available within the city.
“Crucially though, best-in-class Grade A space remains at a premium. Out of all the office space currently available in the Glasgow market, only 75,943 sq ft of it is considered prime, new build Grade A, representing just 2.94 per cent of all Glasgow office supply.
“Prime rents remained steady at £36 per sq ft in the first half of the year. With occupiers continuing to seek buildings with strong ESG [environmental, social and governance] credentials and amenities that attract staff back to the workplace, it is expected that much of the future demand will be for newer Grade A space.
“This will result in prime office rents within the city rising to £39.50 by the end of the year. This positive rental growth will be amplified by the lack of new development coming out the ground, in addition to continued rising construction costs and inflation.”
Regarding Edinburgh, the announcement says: “Edinburgh had a strong second quarter of the year with a total office space take-up of 174,458 sq ft, which is a significant increase compared to the previous quarter and 29 per cent above the Q2 average. This brought the total take-up for the year in Edinburgh to 298,398 sq ft.
“The flight to quality trend continues to be prominent in the Edinburgh office market, with Grade A office space accounting for nearly 40 per cent of the total transactions during the quarter, amounting to 73,576 sq ft. Significant deals included the sub-letting of 28,000 sq ft of space at 2 Freer Street to Analogue Devices.
“Global sports betting, gaming and entertainment provider, Flutter, secured the entire 59,000 sq ft building in the Fountainbridge area in 2021; however, never occupied the full building. Another significant transaction was the pre-letting of 20/21 Charlotte Square to Hampden and Co, the private bank secured the double townhouse spanning 9,322 sq ft.
“During the second quarter, there was a total of 52 transactions, bringing the year’s total number of deals to 90. As with Glasgow, the majority of transactions occurred in the sub 5,000 sq ft market in both the city centre and out-of-town areas, totalling 42 deals. While there was a high number of new letting transactions, re-gears also played a significant role in shaping the office market, accounting for 62,280 sq ft. This indicates that due to limited supply, occupiers are choosing to stay in their current locations.
“The serviced office market in Edinburgh continues to operate at nearly full occupancy, particularly for top-tier offerings. As a demonstration of that, serviced office provider Cubo secured its first venture in Scotland in Q2 with a 14,500 sq ft letting at 40 Princes Street on a 15-year straight lease.
“Prime rents in Edinburgh have been increasing over the year, primarily due to the limited availability of new Grade A developments and the demand for high-quality spaces driven by factors like ESG considerations and employee wellbeing. Currently, prime rents stand at £43 per sq ft, but further growth is anticipated in the second half of the year.
“The vacancy rate for new Grade A office space in the city centre is incredibly low at just 0.31 per cent, indicating a severely limited supply. Overall supply once again crept up in the last quarter, with 1.75m sq. ft of office space now available within the city. However, Grade A new supply is down on last quarter showing that demand for quality space remains prominent.”
Regarding Aberdeen, CBRE comments: “In Aberdeen, take-up of office space for the second quarter of the year totalled 54,584 sq ft, reflecting a slight increase on the previous quarter’s 54,009 sq ft figure and bringing the total for the first half of 2023 to 108,593 sq ft.
“The largest deal of the quarter saw energy services company Genesis relocating its office headquarters from an out-of-town office in Westhill to 26 Albyn Place in the west end of the city.
“The 14,100 sq ft office has been extensively refurbished by landlord Tilestamp achieving an EPC A rating in the process.
“As with Glasgow and Edinburgh, the majority of transactions appeared in the sub 5,000 sq ft market showing whilst there is still activity and demand, occupiers are taking less space.
“Encouragement should be taken from the city’s continued falling office availability, with supply now sitting at 2,516,097 sq ft, down five per cent from the previous quarter. As always, Grade A space within the city remains in shorter supply with approximately 209,362 sq ft, just eight per cent of the total space, as the requirement for best-in-class space continues within the Granite City.”
Pictured: Broomielaw, Glasgow, Picture credit: Place Design Scotland
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