Research from leading commercial property consultancy CBRE Scotland shows the Glasgow city centre office market has continued its strong year in 2018 into the third quarter with a further 140,962 sq ft of office space transactions, bringing the total take-up for the first three quarters of the year to 734,863 sq ft – 30% above the ten year annual average of 564,000 sq ft.
The take-up for Q3 also represents a 121% increase when compared against the same period in 2017 (63,608 sq ft), representing the strength of the Glasgow city centre office market at present. Furthermore, this quarter produced another 50,000 sq ft plus transaction with HMRC taking 60,000 sq ft at 123 St Vincent Street. This brings the total number of transactions in 2018 amassing over 50,000 sq ft to four whilst there were three during 2017.
Although Glasgow’s city centre market performance was exceptionally strong, the Glasgow periphery and out of town office sectors have also experienced positive results, with 504,766 sq ft and 121,175 sq ft of take-up respectively. The Buchanan Wharf/Barclays deal accounted for 470,000 sq ft of the Glasgow periphery figure, showing there is demand and appetite for space outside of the traditional city centre market. Furthermore, global customer experience contractor Sitel (UK) took 60,000 sq ft at Maxim Office Park, with CBRE acting for the landlord, representing the largest out of town deal this year.
The lack of Grade A supply within the city centre – Glasgow Grade A vacancy rates are currently 0.23% with 32,910 sq ft available – and the lack of development within the pipeline may see more occupiers look outwards, towards developments such as Clyde Gateway’s Magenta in the east end of the city. There is currently 524,148 sq ft of supply in the periphery market and 1,998,127 sq ft in the out of town market.
The lack of supply should see city centre prime rents rise which will then have a knock-on effect towards the rest of the market, with refurbished Grade B rents also set to increase because of the squeeze.
Commenting on the figures, Alistair Urquhart, associate director in the Advisory and Transaction Services team, said: “The Glasgow office market’s strong year shows no sign of halting as it entered the third quarter of 2018, becoming a leading performer in terms of office take-up for any major UK city outside London. If take-up in the final quarter of the year continues with this trend, Glasgow could be on course for a record breaking year.”