Glasgow site acquired | logistics report | Grade B growth
Property investment and development company CEG has managed the acquisition of 33 Cadogan Street in Glasgow’s business district.
With full planning permission in place for a 275,000 sq ft development, the site has already been cleared and readied for construction.
CEG has appointed a design team to enhance the sustainability credentials of the new development.
Glasgow-based, Cooper Cromar, has been retained as architect for the scheme having delivered CEG’s Number One Kirkstall Forge in Leeds.
CBRE advised CEG on the acquisition of 33 Cadogan Street. Knight Frank and JLL represented M&G on the sale. JLL and CBRE have been appointed as joint agents to market the new development on behalf of CEG.
Tom Gaynor, head of Investment at CEG, said: “We are confident in the strength of Glasgow’s office market. The city is under supplied in terms of Grade A workspace and there is a very restricted pipeline of consented and funded schemes. A significant number of recent lettings has further eroded available stock.
“Designed as a UK best in class building, The Grid responds to occupiers Net Zero Carbon and sustainability requirements as well as providing enhanced amenities and a workspace environment that occupiers are seeking for their employees. The scheme is fully funded and we are committed to a pathway to commence construction on site as soon as possible.”
In 2006 CEG developed Aurora on Bothwell Street, helping to kickstart the regeneration of the area with its 178,000 sq ft new build. The speculative development was fully let within six months of completion.
The company’s ONYX development in Glasgow was recently redeveloped to deliver a new café, an extensive range of facilities for cyclists and new flexible Let Ready studios, providing fully-furnished grow-on space for smaller companies and project or satellite space for larger firm
CBRE Scotland leadership changes
Real estate advisor CBRE has announced a restructure of its leadership team in Scotland following a strategic review of the business, to drive growth over the next five years. Full story here
An industrial and logistics report from Colliers says there continues to be an urgent requirement for speculative development in Scotland and it will be between late 2022 and 2023 before most proposed schemes come on stream.
Take-up activity in Scotland for all sizes reached 6.5 million sq ft in 2021, a contraction of 4% year-on-year. That said, as more deals are disclosed for the year, these figures are likely to increase over the coming weeks.
Total availability for all sizes was 8.5 million sq ft in Q4 2021, an annual decrease of -15.8 per cent which equates to a record low vacancy rate of 3.5 per cent. Moreover, an absolute lack of prime and good quality units is proving challenging to those tenants in need of operationally efficient warehouse accommodation.
Iain Davidson, director, industrial and logistics, Colliers Scotland, commented: “Demand for industrial space emanates from a broad spectrum of occupiers but, thanks to the growth of e-commerce, the storage, distribution and parcel delivery sectors were quite acquisitive last year.
“Other sectors such as food and drink, engineering and manufacturing also witnessed good levels of demand. Looking forward, we expect an increase in pre-let activity with moderate rental growth due to the record-low availability.”
Refurbishment and rental growth
The post-pandemic hunt for ‘best in class’ offices will unlock refurbishment opportunities of Grade B/C stock in key cities, with rents setting new highs, according to new research from Savills.
Against a backdrop of limited new supply in some of the Big Six cities (Birmingham, Bristol, Edinburgh, Glasgow, Leeds and Manchester), Savills believes refurbishment will be a key focus of the UK regional office market in the year ahead.
The firm’s research finds the development pipeline for new Grade A offices in the Big 6 markets is “severely limited”, with only 1.6m sq ft of available new space due to complete between 2022 and 2025.
This compares with the 9.2 million sq ft of take-up between 2018 and 2021 – exceeding the available new space for the next four years by a mammoth 468%.
The availability of Grade B/C supply, which at 5.65 million is comparatively larger, presents an opportunity for investment and refurbishment to improve this stock to a Grade A standard, says the firm.
James Evans, national head of office agency at Savills,said: “Refurbishments are both quicker to deliver and often more economical, while also presenting occupiers with an interesting sustainability proposition given the re-use of existing buildings.
“Furthermore, as we have seen in the South East already, the weight of demand could lead to significant rental growth on refurbished stock. Occupiers are prepared to pay higher rents for better space.”
By comparing the current new build Grade A rents against best in class refurbished space Savills found that Glasgow and Birmingham has the largest rental gaps at c.15%, compared to c.10% in the other Big 6 markets, suggesting these two markets are likely to see the biggest jump in refurbishment rents.”