Vacancies on the decline
Best Q2 for a decade for Glasgow offices
The consultancy’s latest figures showed that 149,527 sq. ft. of office stock was let in Glasgow during the period April to June 2016 – the highest since 2007.
This also compares with 97,000 sq. ft. in the same three months last year (up 54%) and is marginally higher than the 147,000 sq. ft. let during Q2 2010.
This quarter’s activity was mainly driven by two large occupancy deals in the city involving AXA Insurance and Regus.
Last month AXA announced it would occupy 50,000 sq. ft. at Glasgow’s Cuprum building, located at Atlantic Quay – one of the largest lettings of H1 2016. Meanwhile, serviced office provider Regus agreed to take 30,000 sq. ft. at one of the city’s most well-known office buildings, Tay House (above), which over-arches the M8.
Knight Frank advise Tristan Capital Partners and London & Scottish on the Cuprum building and Tay House, respectively. Colin Mackenzie, Office Agency Partner at Knight Frank in Glasgow, said that the deals put further pressure on the availability of accommodation in the city centre.
Mr Mackenzie said: “Vacancy in Glasgow’s central business district is very much on the decline. With no new-build developments currently under construction, this trend is only likely to continue.
“The dearth in stock is particularly acute for Grade A offices, with only 1 West Regent Street and St Vincent Plaza still offering new accommodation– both buildings are attracting interest in the limited amount they have left.
“Occupiers will need to think very carefully about their occupational strategies for the next couple of years, particularly those seeking 20,000 sq. ft. or more in the city. There are also some great refurbishment schemes coming on line, such as 100 Queen Street and 9 George Square.
“There is still demand for space in Glasgow and the effects of Brexit are not yet fully apparent. There are no indications that it has had an effect on any live occupier requirements. With supply so low, the market dynamics in Glasgow remain largely unchanged.”
Broadcasting giant Sky is the latest big name to commit to the building and has agreed a five year lease on 41,700 sq ft on the first floor at £14.00 psf. Similarly, Actavo, which operates a customer contact centre for Scottish Power, has signed a five year lease on 15,700 sq ft on the third floor, also at £14.00 psf.
In addition, Aggreko, has agreed a five year extension over 9,760 sq ft on the ground floor and has also taken a further 1,900 sq ft on a short-term basis. Meanwhile, occupational health provider Ablemed has relocated from elsewhere in the building and agreed a new and expanded 10-year lease on 4,100 sq ft.
The latest deals are a further boost to asset manager APAM following its significant investment in the property, which saw computer giant Dell commit to CityPark early last year when it agreed a new 10-year lease.
The building was extensively refurbished in 2014 and has since added a children’s nursery to an already impressive list of amenities including a café, a shop, a hairdressing salon and gym. There is still circa 40,000 sq ft of high quality office space available to let within the building.
Commenting on the latest transaction, William Powell, APAM’s executive director, said: “I am delighted SKY has committed to CityPark. It is a significant agreement and adds to our already impressive list of tenants which include the likes of Dell, CH2M Hill and Teleperformance to name but a few.
“The Sky and Actavo activity as well as the other recently completed deals proves CityPark continues to strengthen its position as a key business location in Scotland.”
Lambert Smith Hampton and CBRE helped secure the new deals. Cushman and Wakefield acted for Sky. DPL Chartered Surveyors acted for Actavo and Thomson Property Consultants acted for Ablemed.