Signs of pick-up after plunge in real estate market
The huge Virgin Money development in Bothwell Street Glasgow is among those that have been delayed
Rentals remain steady in Scotland’s commercial property market in a sign that demand for office space is holding up.
There are also indications that investors in the Far East will be active in the UK “as and when” the market stabilises as currency differentials remain attractive.
Real estate adviser CBRE’s second quarter report, covering the lockdown months, confirms earlier expectations of imminent acquisitions, but also reveals the sharp plunge in activity during the lockdown.
The global health pandemic has pushed back completion dates on office developments in Edinburgh, such as Capital Square and New Fountainbridge, and in Glasgow the developments at Atlantic Square and 177 Bothwell Street.
Stewart Taylor, head of the firm’s Scottish office agency business, said: “The offices sector, along with every other sector, has not emerged unscathed from the COVID-19 pandemic.
“The figures are unsurprising, particularly as buildings couldn’t be viewed or surveyed. If anything, activity was actually better than expected.
“What has been encouraging is that despite an industry-wide debate on how we will work in the future, occupiers have continued to progress acquisitions and the last three weeks have seen a marked increase in the speed at which negotiations and deals are progressing.”
He added: “While offices in the future may look different and may be smaller than anticipated at the start of 2020, the desire to have an office base remains and in fact much of what we’re seeing is simply an acceleration of trends that were already occurring – a flight to the best quality space with the best wellness credentials.
“With the delay in the completion of new buildings, the critical shortage of new space in Edinburgh and Glasgow has simply been exacerbated. This, coupled with positive employment forecasts for the regions, means we don’t foresee any impact on headline rental levels.”