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No seven year itch for Commercial property market

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The most talked about year in Glasgow’s history was also the most successful for the office market since 2007, according to the latest statistics from global property agents Cushman & Wakefield.

Close to 1 million sq ft of office space (987,692 sq ft) was let in the city and its surrounding areas in 2014 thanks to high profile lettings such as 48,570 sq ft to Network Rail at Hermes at 151/155 St Vincent Street.

A total of 657,258 sq ft was let in the city centre and 330,434 sq ft out of town - a small rise of 1.8% on the previous year (2013 970,363 sq ft).

Andy Cunningham, Partner Business Space at Cushman & Wakefield in Glasgow, said: “There is no doubt that the referendum on Scottish independence created a period of uncertainty for Glasgow and the rest of Scotland. Despite this, both the city business district and out of town office markets outperformed all our expectations. 

“It was an incredible year for Glasgow with the Commonwealth Games, MTV Europe Music Awards and BBC Sports Personality of the Year being held in the city which brought unprecedented national and international exposure which helped tackle many of the outdated perceptions about Glasgow. The city’s people, infrastructure and architecture were beamed all across the globe which can only be a help in attracting future investment from occupiers and investors alike.”

He added that prospects for 2015 look very promising already. “Early January is traditionally a quiet time for the commercial property market but we have had a healthy stream of enquiries right from the minute we got back to our desks after the Christmas break and we are speaking to lots of big name occupiers looking to upgrade to more efficient premises in more prominent locations.

“With a real shortage of Grade A office space looming there is a bit of a scramble going on with occupiers looking at pre-letting the best space coming out of the ground.”

Only 171,110 sq ft of Grade A space is currently available but according to Cunningham options for big corporates looking for in excess of 50,000 sq ft or 500 desks to put it another way, are limited.  He said: “Some of that space is not contiguous meaning companies would have to take space on different floors of one building or grey space from occupiers only available on short term leases.”

According to Cunningham that while there is a lot of Grade B space – in excess of 1.1m sq ft – there are very few ‘big box’ options in that class of property either, following the letting of 151/155 St Vincent Street, George House and Guildhall.

He said: “Developers will need to start thinking about the next wave of development as there is going to be a big lag in the city centre. In the meantime what we might see is occupiers being tempted to look at prime out of town locations.”

Top rents for Grade A property hit £29 per sq ft in the city centre while out of town the top rental was recorded at £16 per sq ft.