Glasgow’s office occupier market performed in line with five year averages over the second quarter of 2017 but was bolstered by a handful of large lettings, according to new research from JLL.
Office take-up in the city centre in Q2 (April-June) was 130,322 sq ft, an increase of 26 per cent compared to Q1, but down by 21 per cent year on year.
In total, there were 58 deals completed across Greater Glasgow, with 20 of those taking place within city centre properties. The previous quarter saw 24 city centre deals completed.
The second quarter’s largest letting saw The Student Loans Company take 40,853 of office space within the Europa Building on 450 Argyle Street.
Other notable deals include the 3rd floor letting at Commonwealth House to OFGEM, Britain’s energy market regulator, who took 21,155 sq ft at the Albion Street offices. Most recently, engineering consultants Jacobs took 14,824 sq ft on the third floor of 95 Bothwell Street. JLL were involved across 29 per cent of activity during the quarter and advised on two of the quarter’s four biggest deals.
Election-effect subdues mid-market
Many decisions were delayed due to uncertainty surrounding the General Election, according to JLL, with the market for mid-sized occupiers remaining particularly strained. The majority of deals in Q2 were for sub 4,000 sq ft office space.
Around 47,000 sq ft of lease renewals took place during the quarter, suggesting some pockets of the market exercised caution, choosing to stay put rather than looking for brand new accommodation.
Despite noting caution within Glasgow’s office market, JLL remains confident of a strong second half to the year with a number of other notable sized deals in progress.
Claire Watson, Senior Surveyor from JLL, said: “Despite concerns over the wider economy due to this year’s snap General Election and doubts over the nature of the UK’s exit from Europe, Glasgow’s office market returned a solid second quarter in line with five year averages. A handful of lettings at the larger end have undoubtedly shored up a quarter where the majority of deals were for office space under 4,000 sq ft.
“As has been the case for some time, there continues to be a chronic lack of supply across Glasgow’s office market, with no speculative developments on the horizon. Tellingly, 100 per cent of office lettings in Q2 were for second hand office stock, with the majority being grade B offices, indicating the lack of high quality, available office stock on the market. With a further tightening of Grade A supply, expect to see further refurbished Grade B accommodation return to the market throughout the year.”