Glasgow Office Market Update

Glasgow has seen the highest level of office lettings take-up in more than a decade in a new report by property consultancy CBRE. Take-up in Scotland’s largest city during the third quarter of 2019 has been “exceptionally strong”, according to CBRE, totalling just over 352,000 square feet – the highest level of Q3 take-up in more than ten years. The year-to-date total of office leases signed reached 611,712 sq ft. CBRE say that the total take-up for 2019 expected to bypass the five-year average of 700,974 sq ft following the strong Q3 performance.

Metropolis has run 72 leads on Glasgow office movers so far this year, with around 90 lettings recorded of over 2,000 sq ft. Researchers are talking to a further 120 office occupiers with lease expiries approaching in Glasgow over the next two years.

The Q3 figure was significantly bolstered by the letting of 272,858 sq ft at One Central on Argyle Street by JP Morgan Chase. Stream Technologies took 27,000 sq ft at 319 St Vincent Street. Of the remaining 24 deals, over half were under 5,000 sq ft, yet occupier demand for larger buildings remains high, as proven with the number of active requirements ongoing in Glasgow including from serviced office operators.

From total demand of 800,000 sq ft, there is strong underlying demand from the banking & finance sector from occupiers such as Barclays, Aviva and Chubb Insurance. WeWork is believed to be under offer on 77,000 sq ft at 50 Bothwell Street. A number of active larger requirements, should further boost take-up by year end, although in reality a two tier market is operating with demand for Grade B smaller offices more challenging. A greater number of smaller deals points to stable market which is less susceptible to fluctuation, than one driven by large individual deals.

Over the past five years Glasgow has seen employment growth of 19% in the professional, scientific and tech industries, and is forecast to see a further 12% growth over the next five years. This is projected to create an additional 4,000 jobs in these industries, suggesting strong demand from these sectors will continue. This is reflected in the current requirements in the market.

Overall Glasgow city centre office supply has risen slightly and now sits at 1,082,569 sq ft (a vacancy rate of 8.07%), with a further 185,222 sq ft rumoured to be under offer. There is now no ‘new build’ Grade A space available and none due to complete until late 2020.  There are some revamps with 151 West George Street, 55 Douglas Street, Ink Building and Sentinel all currently under refurbishment and due to complete in 2019. However the pressure on good quality space will continue over the course of 2019 and 2020.

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