In the fourth quarter (Q4) of 2011 city centre and out-of-town office take-up in the UK, including Glasgow and Edinburgh, was down by just 4% on the quarterly average over the last three years.
The latest quarterly report on Scottish city centre and out-of-town office occupancy by commercial property consultants GVA notes that Glasgow has one of the lowest supplies of grade A office space in the UK.
Glasgow has seen a large number of enquiries and viewings, but these have not all been converted into deals. Larger deals have been slow-moving, as companies have delayed decisions. Take-up has been dominated by small to medium sized transactions.
GVA’s `Big Nine’ report – referring to the firm’s nine UK regional offices, including Glasgow and Edinburgh – shows that take up across the nine centres totalled 549,000 square feet in Q4. Within this, Edinburgh totalled 97,000 square feet, a decrease from 126,626 in Q3. Glasgow’s take-up was 64,000 square feet, down from 89,655 in the previous quarter.
Glasgow has one year’s supply of new grade A office space, unchanged from last year. Abstract Securities has plans to speculatively build 170,000 square feet of office space this year at 301 St Vincent Street. Duddingston House Properties and BAM also have advanced proposals for large scale office developments within the core central business district.
The report also indicates that rent and incentives in both Glasgow and Edinburgh remain the same as a year ago.
Alison Taylor, GVA’s head of agency in the Glasgow office, said: “Despite slow progress with deals across the board, the market remains active and transactions continue to complete.
“However, Glasgow could soon be in a position where take-up may be reduced as a consequence of the lack of future supply. For developers, the market dynamics are suggesting a counter cyclical investment by an opportunistic developer may reap rewards – as the existing new Grade A stock will extinguish before any new development will complete, “ said Taylor.
Difficulties already exist for any occupier seeking more than 50,000 square feet in a single building, with The Grosvenor opposite Central Station, Cuprum on Argyle Street and Capella on York Street being the only new Grade A space available to accommodate such a requirement.
Taylor said: “Although Hermes and Redevco are busy on site refurbishing existing buildings to plug this gap, demand is likely to outstrip supply in Glasgow in 2013.
“The message to indigenous occupiers with an eye on relocation in the next few years is not to be fooled by the number of boards about – when you drill into the stock available you will be surprised at the limited choice of new Grade A office space.”
