Lettings update

Glasgow offices rebound while Edinburgh static

The Cadworks development in Glasgow

A sharp take-up of office space in Glasgow helped the Scottish market remain steady during the third quarter.

Agents let 127,515 sq ft in Glasgow, up significantly from 95,809 sq ft in the second three-month period. Edinburgh was broadly flat with a total of 164,281 sq ft negotiated, only down slightly from Q2’s 172,580 sq ft.

Despite heightened activity in Glasgow there was only one new build Grade A deal in the third quarter, a 10,112 sq ft letting to SThree Management Services at Cadworks.

A CBRE report says this shows that the lack of new available Grade A space continues to be an issue in Glasgow city centre.

The largest deal in Q3 was a 27,831 sq ft letting at Lucent on Bothwell Street to Pinsent Masons, while other notable transactions included 14,284 sq ft at 55 Douglas Street to Reach and Material Source taking 6,771 sq ft of space at 180 West George Street.

Overall supply is up slightly on last quarter, with 2.79m sq ft of office space now available within the city. However, the vacancy rate for new, best-in-class Grade A office space in the city centre is incredibly low at just 0.36%, indicating a severely limited supply.

Martin Speirs, Associate Director from CBRE in Glasgow, said: “This third quarter has shown once again the robust and resilient nature of the Glasgow office market; a market that even in tricky economic conditions still seems to have the ability to rebase and recover.

“Rents for both Grade A and high-quality Grade B are forecasted to continue to climb further in the next 18 to 24 months. The lack of new stock being delivered, rising building costs and inflationary pressures have combined to create a scenario where even the most negative of office agent within the city can’t deny the likelihood of reaching £40 per sq ft in the very near future.”

Out of town offices in the capital proved popular in Q3 with more than 60,000 sq ft of the total take-up in West Edinburgh.

This included Element taking 16,000 sq ft at 1 New Park Square and Pulsant securing 10,000 sq ft at 4/5 Lochside Avenue. The largest deal of the quarter was also in West Edinburgh with Scottish Water Business Stream taking a sub lease of 25,600 sq ft from Aegon at 1-3 Lochside Crescent.

1 New Park Square
New Park Square at Edinburgh Park

The vacancy rate for new Grade A office space in the city centre remains low at 0.53%, indicating a limited supply. Overall supply reduced slightly, with 1.67m sq ft of office space now available within the city. However, Grade A new supply in the city centre increased with 95,740 sq ft now available.

Prime rents in Glasgow and Edinburgh remain high at £39.50 per sq ft and £43 per sq ft respectively. Rents are expected to rise further due to the lack of available grade A developments in both cities.

Beverley Mortimer, associate director at CBRE in Edinburgh, said: “Demand remains strong for new or best-in-class space, highlighted by those occupiers issuing their requirements significantly in advance of their lease events in order to secure the quality they want.

“What we are now seeing is an increase in the volume of buildings being converted to alternative uses that were previously being considered as office refurbishments.”

Differences in compiling the figures between agencies are apparent with Knight Frank saying there was 103,409 sq. ft. of office space taken up in Edinburgh city centre during the third quarter of 2023 – down 14.7% on the same period last year.

This is considerably lower than CBRE’s figure.

Knight Franks says there is currently no new Grade A space available for occupiers in Edinburgh city centre, with 30 Semple Street the only Grade A scheme currently on site and not set to complete until Q3 2024. 

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