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.

Central London Office Market September 2019

Central London office lettings in September 2019 reached 1.2m sq ft sq ft, from 57 mid-large size office transactions (5,000 sq ft+) during the month. The September 2019 deals volume figure is above the current monthly London average of 1m sq ft.

September was characterised by 14 office deals over 20,000 sq ft, which were led by WeWork’s long awaited 287,000 sq ft deal at 30 Churchill Place, London, E14; Li Fung’s 51,000 sq ft deal at West Works, W12; Intermediate Capital’s 50,000 sq ft pre-let at Procession House, EC4 and Hana’s 45,000 sq ft deal at 70 St Mary Axe, EC3.

Business services topped the table of lettings by sector, compiled by Metropolis, underpinned by lettings to WeWork, Knotel and Hana. This was followed by financial services, led by deals to Ion Trading, Nasdaq and Triton. The IT services sector was also prominent.

Office deals ‘under offer’ in central London rose slightly to 3.7m sq ft, with pending deal volumes are healthy in nearly all sub-markets, with a number of impending deals in solicitor’s hands.

By area, the City accounted for 36% of the office floorspace let in September 2019 at 442,000 sq ft. The West End saw 280,000 sq ft of take-up. Midtown contributed 181,000 sq ft of lettings. Current London office demand is calculated to be around 4m sq ft in the City and 3.2m sq ft in the West End.

The volume of grade A (newly built or refurbished office space) let during the month, reached 416,000 sq ft sq ft (35% of the monthly total). Slightly down on recent months. Availability is dominated by secondhand space in all London markets.

The large number of upcoming lease events in the core has been a key driver to mover activity. Metropolis research is currently monitoring 640 ‘live’ London office requirements, including a large volume of requirements from the banking and finance sectors, with pending deals for space of up to 2.5m sq ft due to sign in the next few months.

London Office Market August 2019

Central London office lettings in August 2019 reached 925,000 sq ft, from 35 mid-large size office transactions (5,000 sq ft+) during the month. The August 2019 deals volume figure is just below the current monthly London average of 1m sq ft.

August was characterised by 12 office deals over 20,000 sq ft, which were led by Convene’s 99,300 sq ft now confirmed pre-let at 22 Bishopsgate, EC3; Nationwide’s 88,000 sq ft deal at The Post Building, WC1 and Spaces’s 78,000 sq ft pre-refurbishment deal at 68 King William Street, EC4

Financial services topped the table of lettings by sector, compiled by Metropolis, underpinned by lettings to Nationwide, Bank of Montreal and Intermediate Capital. This was followed by professional services led by deals to law firms Cooley, Kingsley Napley and Kirkland & Ellis. The business services sector was also prominent with more deals to Spaces and WeWork.

Office deals ‘under offer’ in central London fell slightly to 3.5m sq ft, but pending deal volumes are healthy in nearly all sub-markets, with a number of impending deals in solicitor’s hands.

By area, the City accounted for 71% of the office floorspace let in August 2019 at 653,000 sq ft. The West End saw 75,000 sq ft of take-up. Midtown contributed 151,000 sq ft of lettings and Southbank 30,000 sq ft. Current London office demand is calculated to be around 3.8m sq ft in the City and 3.3m sq ft in the West End.

The volume of grade A (newly built or refurbished office space) let during the month, reached 613,000 sq ft sq ft (66% of the monthly total), as transactions for new space maintained the recent strong showing. Availability is dominated by secondhand space in all London markets.

The large number of upcoming lease events in the core has been a key driver to mover activity. Metropolis research is currently monitoring 620 ‘live’ London office requirements, including a large volume of requirements from the banking and finance sectors, with pending deals for space of up to 1.5m sq ft due to sign in the next few months.