New survey reveals truth about Glasgow’s offices

The report conducted by property agents Cushman & Wakefield shows that there is currently a total of 13.8 million sq ft of office space in the Central Glasgow office market, much less than the frequently quoted figure of 20 million sq ft.

The Central Glasgow office market is defined in the report as the area bordered from Port Dundas in the north of the city, the River Clyde and Broomielaw in the South, North Street in the West and Duke Street in the East.

Cushman & Wakefield’s Andy Cunningham, Partner and Head of Business Space Agency – Glasgow, said: “I started my career in property more than 20 years ago and in that time no-one has ever produced a definitive figure for the amount of office space in Scotland’s biggest city.

“People used to quote anywhere from 15 million to 20 million square foot but could never back it up with facts. We put a team of nine people on the project and spent the whole summer gathering the data. We were really surprised to find how much less space there was than we expected.”

Of that space, only 233,051 sq ft or 1.7 per cent of Grade A space (total 1,337,837 sq ft) is currently vacant according to the survey.

While Grade B has more availability at 1,215,282 sq ft (8.8 per cent of the total Grade B stock of 10,057,924 sq ft), the entry level end of the market is also under pressure with just 1.2 per cent of Grade C stock vacant - the total currently empty is equivalent to 172,285 sq ft.

Andy added: “Space is tight most worryingly at the top end of the market – it would only take only one or two large scale lettings before this became a real issue for companies coming to the end of their existing leases or considering locating in the city.

“The drop in the amount of office stock can in part be explained by the general trend towards residential, PRS, hotel, student residential and educational use of buildings within UK regional cities.

“In Glasgow we have seen a 1960s office building at 179 West Regent Street transformed into the new 5-star Dakota Deluxe Hotel and the former HM Revenue and Customs offices at 200 West Regent Street are now student halls of residence. The former Strathclyde Police Headquarters building at 173 Pitt Street has recently been sold for PRS use.”

According to Andy, the other big issue is the lack of new office buildings being built.

He said: “Not enough new buildings are coming out of the ground due to a complete lack of speculative finance. Occupiers really need to consider their future options carefully – in the current climate developers are not able to spend the money on pushing ahead with speculative developments.

“If occupiers want modern high specification Grade A offices with large open plan floor plates, they will really have to consider pre-lets and sooner rather than later. It can take take at least three years for a new building to go from the early planning stages to being ready for occupation.

“The general trend for occupiers in Glasgow has been to wait and see buildings either under construction or finished. However in the current climate that just isn’t going to be an option and either large corporates take the plunge and look at pre-let or face compromising on the quality of their office accommodation.”

He added that with Grade A space at a premium, rents are likely to start to climb which is good news for landlords but would mean tenants could face paying more in the long run.

He said: “If Grade A space gets any scarcer rents could rise to over £30 per sq ft. However companies who commit to pre-lets will be able to negotiate more favourable terms and there are many other advantages of early commitment including de-risking business continuity and having a choice of floors to occupy.”