Office supply crisis for Glasgow
SME growth threatened by city’s space shortage
Glasgow: start-ups booming, but space is in short supply
Start-ups and small businesses in Glasgow are facing a squeeze on growth because of a shortage of suitable offices, according to a new report.
Only six months worth of office suites between 1,000 and 2,000 sq ft remain available in the city, ccording to research by property agent Savills.
Despite the figures, Glasgow is the leading city for start-up businesses in Scotland, with 7,845 launched this year according to data from StartUp Britain, compared to 6,635 in Edinburgh and 1,683 in Aberdeen.
However, a lack of options is pushing up occupational costs, with rents on lettings in the 1,000 -2000 sq ft bracket 11% ahead of 2016 levels, with some deals on the best small space fetching above £20 per sq ft.
Savills adds that this weight of demand from small businesses has helped give way to a rise in serviced office operators across the city including Nexus Business Space, Spaces Charing Cross and Clockwise Offices – all of which have launched in the last 18 months.
Looking longer term, Savills says that with more than 100,000 sq ft of availability in the 2,000 – 3,000 sq ft office size band, against a lower average level of annual take up (only 31,564 sq ft), landlords should consider sub dividing office suites to cater for the demand for sub 2,000 sq ft options that qualify for full small business rates relief.
Jacqui Morton, associate in the business space team at Savills Glasgow, said: “Glasgow is a city people want to work in and where businesses want to base themselves, and it is important we support these businesses and allow them to grow through the provision of suitable and affordable office accommodation.
“There is a severe lack of small office suites in the city and whilst we welcome the arrival of good serviced office options, this shortage combined with the increased rents being achieved makes a strong case for landlords to split larger 2,000 to 3,000 sq ft suites that are physically suitable.”
Cal Lee, head of Workthere, a new venture by Savills, adds: “Over the course of the last few years the UK in particular has witnessed considerable growth in the flexible work space sector, with many new entrants coming to the market.
“At the same time, demand for flexible work space continues to grow as more businesses including start ups, SMEs and even larger corporate companies are seeing the benefits of flexible work space over a more traditional lease.”