Market snapshot

Office Market Pulse Glasgow Q2 2013

Take-up of office space across Glasgow fell by 13% during the first half of 2013 compared with the same period last year as the market continues to be dominated by sub-5,000 sq ft transactions.

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In this issue:

Demand remains high for grade B office space

Half year take-up for 2013 stands at 200,800 sq ft, down by circa 30,000 sq ft compared to the same period last year.

Glasgow city centre office take-up in Q2 2012 totalled 116,735 sq ft; similar to the sameperiod in 2012.

Demand remains high for sub 5,000 sq ft Grade B accommodation, with 85% of the 26 deals transacted for space within this size bracket. The west of Glasgow’s out of town office market witnessed stronger demand, with 8,450 sq ft being let to Aquira Direct Marketing at Pacific Quay and BMJ Architects relocating to 5,500 sq ft of space at the Hub development in Pacific Quay.

Take-up to the East in Lanarkshire was around 32,000 sq ft and included two deals at Coltness House, Strathclyde Business Park to CSE Controls and Sphinx Medical.  Both deals were sub-5,000 sq ft.

For a detailed breakdown of Q2 2013 take-up by grade, please click here or on Chart 1 to the left of this article.

Key Glasgow office lettings Q2 2013

Property 

Size (sq ft)

Landlord / Vendor  Tenant / Purchaser 
1st & Part 3rd Floors, Alhambra house, 45 Wellington Street 20,742 F&C REIT    

JP Morgan Chase Bank

123 St. Vincent Street  15,454 Aviva     KPMG
4th Floor, The Cerium Building, 55 Douglas Street 13,685 Ministry of Defence (Head Tenant) Student Loans Company

2nd & 3rd Floors, 10 Bothwell Street 

10,163 Mapeley Victim Support

Source: Lambert Smith Hampton

Three new developments start on site

It has been four years since Glasgow last witnessed the completion of a grade A building and now the city will see three brand new schemes: BAM’s 110 Queen Street, (165,000 sq ft); Abstract Securities’ St. Vincent Plaza ( 170,000 sq ft) and Paramount, Renfield Street, (145,000 sq ft) being developed by Mountgrange/Prupim. Completion is anticipated by 2015.

Refurbished stock continues to out-supply grade A space by around a third, with refurbished levels standing at around 350,000 sq ft and grade A space around 240,000 sq ft.

For a breakdown of Q2 2013 office supply by grade, please click here or on Chart 2 to the left of this article.

Gap widens between grade A and grade B rental levels

Headline rents for prime grade A office space within the city centre vary significantly from £22.00-£28.50 per sq ft.

Rents for second hand grade A / refurbished grade B office space are between £17.00 and £22.00 per sq ft, with the exception of 151 St. Vincent Street at £25.00 per sq ft.

In the active second hand grade B market, rents have dropped to between £10.00 and £16.00 per sq ft, dependent upon quality and location.

For a breakdown of Q2 2013 office rental values, please click here or on Chart 3 to the left of this article.

How did the national investment market perform in Q2 2013?

Demand for regional stock reached a two year high, with £3.24bn invested in commercial property outside of London (excluding portfolios).

It was not just the regions which saw an increase in Q2, but an up-turn in all activity was recorded with £8.24bn recorded - a 2% increase on the previous quarter. This level of investment was last seen in Q1 2011.

The average deal size fell from £28m in Q1 to £16m in Q2. However, there were double the number and volume of deals for assets between £10m and £30m in Q2 in comparison with Q1.

What does this mean for the market? Find out in UKIT Q2 2013.


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Aasia Mohammad

0141 226 6786

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Aasia Mohammad
Associate Director - Business Space

0141 226 6786

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