Glasgow office space market demonstrated resilience in 2010

King Sturge report shows increase of 3% on 2009 take-up figures

Article posted: 02 Mar 2011

According to King Sturge’s recent national office overview, the office space market in Glasgow demonstrated its resilience in 2010 with a take up of around 670,000 sq ft. This figure represents a slight increase (3%) over 2009 but it is anticipated that levels will decrease in 2011.

Availability of grade A and B stock at the end of 2010 was estimated at 797,999 sq ft, with no new build in the development pipeline.

Notable transactions for the period include Maclay Murray and Spens take up of 40,000 sq ft of space at G1 in George Square, which also leased 20,516 sq ft to Ernst & Young.

Diminishing Grade A space pushed prime headline rents to £27.50 per sq ft by the end of the year, an increase of 4% on 2009. Conversely, out-of-town rents fell to £14.50 per sq ft, a 12% reduction.

In terms of investments in the City, early 2010 saw a further improvement in transactional activity with yields sharpening. Since then the market has stabilised with investors more cautious as product is seen as “fair value” at best. SEB acquire 110 St Vincent Street for £40m, while Aviva paid £30m for Exchange House and Union Investments acquired Equinox (pictured) on Cadogan Street for £24m.

Commenting on the findings Campbell Hart of King Sturge’s Glasgow office said: "Central Glasgow demonstrated its resilience in 2010. The top rent was £29.50 per sq ft, achieved in one building. In general, prime rents settled at £27.50 per sq ft. By contrast, the out-of-town market has fallen away sharply. A benign development pipeline in conjunction with tenants with lease expiries who are already considering options is expected to result in stable prime rents and hardening incentives in 2011. Glasgow is less exposed to the contraction in public sector demand than other cities and will remain the primary Scottish inward investment destination."

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Posted by Sara