Strong demand for property
Office take-up rises in central belt locations
In Glasgow city centre it rose by nearly half in the second quarter of this year compared to the same period last year.
Take up in Edinburgh continued to show steady strong demand during the second quarter.
According to new research by JLL, acquirers took on 97,140 sq ft in Glasgoe city centre and 193, 579 sq ft across Greater Glasgow and the West of Scotland.
City centre take-up was 30% lower than the previous quarter, but it marked a 45% increase on Q2 in 2014. In total, there were 54 deals completed in the area with 25 of those in the city centre.
Alistair Reid, director, JLL, said: “The first half of 2015 has been a strong one for the Glasgow office market, with high levels of demand.
“We have also seen supply increase this quarter, with the major new build Grade A office developments at 110 Queen Street, 1 West Regent Street and St Vincent Plaza all coming onto the market.
“There has been strong interest around these developments over the past three successive quarters and we expect that trend to continue, with immediate supply of Grade A space currently at 612,800 sq. ft.”
JLL was involved in the largest City Centre transaction which saw Teleperformance acquire 27,522 sq. ft. at Cuprum in Cadogan Square.
It was also involved in the largest out of town and peripheral transaction, with Northern Marine purchasing 14,060 sq. ft. of office space in Clydebank.
Other major deals during Q2 included Arup pre-letting 13,603 sq ft at 1 West Regent Street and Arthur J Gallagher UK leasing 9,440 sq ft at the Spectrum building.
The City Centre headline rent was £29.50 per sq ft and is expected to rise in the second half of 2015.
Office occupier take up in Edinburgh continued to show steady strong demand during the second quarter of this year, according to JLL.
In excess of 200,000 sq ft was transacted between April and June, down slightly on the first quarter figure of 211,000 sq ft. The total occupier take-up for the first six months (411,000 sq ft) is behind the same period last year (477,000 sq ft)
JLL – involved in more than 30% of transacted space by sq ft – predicts activity levels to continue at a similar pace over the next six months with year-end take-up expected to be well above the five and ten year average.
With significant pre-let activity anticipated in the second half of the year, take-up for 2015 as a whole could be above last year’s figure which was the highest in over a decade.
There were a total of 58 deals in Q2, an increase on the 45 transacted between January and March. This was predominantly made up of smaller deals, with only three transactions over 10,000 sq ft.
Craig Watson, of JLL in Edinburgh, said: “It is clear that occupier confidence has returned to the Edinburgh office market. Take-up over the last three months has proven strong with a large jump in the number of transactions. No one sector has been dominant, with activity from companies in the professional, financial and technology sectors. However, the transactions have generally been smaller.
“The dynamics of the market are now right for pre-letting activity. Only three buildings can immediately accommodate a requirement over 40,000 sq ft in the city centre. With a number of larger requirements in circulation, we are aware that this latent demand is already starting to consider pre-lets.”
More than 82% of take up occurred in the city centre, with significant lettings including Capita taking 26,896 sq ft at 145 Morrison Street, The Law Society of Scotland acquiring 19,079 sq ft at Atria One and Whitespace taking 13,000 sq ft space at Norloch House.
Occupier demand continues to focus on core city centre locations, with activity in the second half of the year set to focus on two size groupings – sub 5,000 sq ft and above 20,000 sq ft. Corporate activity is also predicted to increase in this period.