Talking Property: Ken Houston
‘Viva Glasgow’, says Aviva following upgrade
Battle has commenced in Glasgow between ‘new’ and ‘good as new’ but the battleground is not car showrooms but the office market of the central business district, particularly that involving ‘grade A’ space.
The three major new-build schemes are: 110 Queen Street,143,000 sq ft; 1 West Regent Street,143,000 sq ft; and St Vincent Plaza,170,000 sq ft. Queen Street is already circa 40% let, Brodies and Deloitte being among the forthcoming occupiers, with a similar level at 1 West Regent.
On the refurbishment front the current main players are Aviva Investors, which has upgraded just under 46,000 sq ft of space at 123 St Vincent Street, and Credential Holdings whose massive scheme at Tay House, Charing Cross offers refurbished floors of up to 30,000 sq ft.
This week it was the turn of Aviva to set out its stall. When completed 15 years ago 123 St Vincent St was a new-build within the original retained Edwardian façade – one of those schemes at which developers in Glasgow have been so adept and have helped secure the role of the city centre as the main office core.
The vacant accommodation is split between three floors – second (comprising 14,750 sq ft), second (15,807 sq ft) and eighth (14,938 sq ft), making a total of 45,495 sq ft. The reception area has also undergone refurbishment. All three floors are open plan with a capability for sub-division into 6,000 sq ft-plus.
The total cost of the refurbishment was in the region of £1.8 million.
Despite the building’s relative youth, clearly the landlords felt that only by upgrading could they compete with the new-build market yet observers will find encouragement that there is sufficient confidence in Glasgow to justify this level of spending.
A fairly cursory tour showed a competent refurbishment with fully raised access floors and the usual other refinements. And though it’s not my role to plug office accommodation, the top floor did seem remarkably divorced from the noise of traffic and footfall despite this being lunchtime in the heart of the city and just a stone’s throw from Central Station.
Jon Ashcroft, director of real estate at Aviva Investors, said: “The office market in Glasgow has shifted considerably over the last two quarters with a noticeable increase in occupier activity and as this is one of the city centre’s best located offices so we anticipate a high level of interest.”
The quoting rent is £24.50 a sq ft. According to Ewan Cameron of Ryden, joint letting agent (with Jones Lang LaSalle), this will bring the figure back to what it was before the financial crash six years ago.
The building plays (and has played) host to some blue chip tenants since completion. KPMG opened a new “tax centre of excellence” two years ago, taking a ten-year lease on 15,500 sq ft at an initial rent quoted to be £23.50 a sq ft.
But it’s been swings and roundabouts: part of the current vacancies have resulted from the departure of Aberdeen Asset Management following its takeover of Scottish Widows Investment Partnership in Edinburgh. AAM has been reported as having paid £25 a sq ft.