Spotlight on Glasgow offices – Savills
Take-up of office space in Glasgow last year was only slightly below average, says Savills. While second-half take-up was “a rather underwhelming” 137,870 sq ft, taking the total for 2012 to 371,870 sq ft, this level of take-up is more or less in line with the totals achieved before the boom years in the city, the firm says. It feels that a “normal” year’s take-up is probably around 400,000 sq ft.
The biggest news for Glasgow’s office market in H2 2012 was Scottish Power’s new 220,000 sq ft development on the former Elphinstone Tower site. The joint venture for this development between Helical Bar and Dawn Developments is close to being forward funded by PRUPIM, Savills says, with Scottish Power believed to be paying around £25 per sq ft on a 25-year pre-let.
The development will free up the company’s existing HQ for a new development or refurbishment: while it has not soaked up any of the available office space in Glasgow, it is a sign, Savills says, that major businesses have the confidence to sign up to new offices, “and a vote of confidence in Glasgow as a major employment location”.
Savills estimates year-end availability at 2.3m sq ft, with Grade A availability accounting for only around 30% of this. Apart from the Scottish Power HQ, there are three speculative office developments currently proposed in the city – totalling 490,000 sq ft. These will not have a significant effect on the Grade A supply/demand imbalance, Savills says.
The lack of new available offices in Glasgow and the restrained development pipeline should support rents, with £27.50 per sq ft estimated to remain the benchmark for top-quality offices in the absence of transactional evidence from the second half of last year. There could be some shortening of rent-free periods, Savills adds – these currently stand at around 30 months on a 10-year lease. Outside the central business district, prime office rents have remained at around £14.50 per sq ft.
