Research from CBRE Scotland shows Glasgow city centre office space take-up in 2018 totalled 970,845 sq ft, up 52% on the on the 2017 figure of 635,015 sq ft and the highest level since 2006.
City centre take-up for Q4 2018 was recorded at 236,002 sq ft, down 29% on the same period for the previous year, although there were 37 deals compared to 34 in Q4 2017.
The increase in total take-up comes as 2018 saw more deals over 10,000 sq ft (20) than in the previous 12 months (10), with Q4 2018 witnessing 6 deals over 10,000 sq ft. CBRE acted on a number of key deals for the quarter, including the acquisition of 57,473 sq ft at Princes House by Barclays, the letting of 30,571 sq ft at 123 St Vincent Street to KPMG, and the letting of 17,686 sq ft at 4 Atlantic Quay to the Scottish Ministers. Other significant transactions saw Chivas Brothers secure 27,558 sq ft at 2/4 Blythswood Square and Macmillan Cancer Support take 17,595 sq ft at Atrium Court.
Business Services was the most dominant sector taking space during 2018, accounting for 34% of all take-up, followed by Consumer & Leisure with 15.7%. Glasgow city centre office stock is sitting at 13.7 million sq ft, 1.3 million sq ft of which is available for occupation. Grade A supply remains critically low at just 32,910 sq ft. The development pipeline remains particularly tight, and there is little evidence of space returning to the market through tenant distress.
Although Glasgow’s city centre market performance was exceptionally strong, the demand for space on the periphery of the city centre was also evidenced by a number of significant deals, including the Buchanan Wharf/Barclays commitment to purchase 470,000 sq ft on the edge of the central business district.
Andy Cunningham, senior director at CBRE, commented: “We are continuing to see business as usual in the Glasgow city centre office market, despite the fears that companies would put decision making on hold until after the conclusion surrounding Brexit.
“Having seen an increase in take-up in 2018, equating to one of the strongest years on record, we are confident that this trend will continue into 2019 and companies will continue to make positive decisions regarding their new offices. Deals such as the Barclays commitment at Buchanan Wharf are also clear indicators that the market is continuing to strengthen on the periphery of the city centre and within the financial services sector.
“In fact, the diminishing development pipeline is likely to create a supply shortage as businesses plan ahead of lease breaks and expiries over the next three years, resulting in a short-term squeeze for any companies needing to move during this timeframe.”