The research project looking at the city’s office stock was conducted by property consultancy CBRE and comes as some experts predict a wholesale shift in demand amid the boom in home and blended working practices brought on by the pandemic.
The firm’s report shows that there is currently a total of 22.4 million square feet of office space in the city, making it Scotland’s largest office market and pushing it onto a platform with the likes of Manchester and Birmingham.
However, of that space, just 6,400 sq ft, or 0.02 per cent, of top-end “Grade A” space in one building is currently vacant. The vacancy rate overall was found to be just under 7.4 per cent.
Andy Cunningham, senior director at CBRE, said: “Confusing boundaries for the office market in Glasgow has resulted in different figures being quoted for the total amount of stock over the years and more worryingly, a potential barrier to UK and international investors.
“We decided to carry out some research and produce a comprehensive review of the market, counting and grading every building to provide an updated stock figure that covered the whole city, something which has never been done before.
“There is a severe shortage of space at the top end of the market – it would take only one fairly modest letting before there is simply nothing available for occupiers seeking ready-to-occupy truly Grade A accommodation.
“This is a serious issue for companies coming to the end of their existing leases or considering locating in the city, meaning Glasgow could fail to retain or attract some key organisations and investment.”
While there is more Grade B availability, at 1,581,282 sq ft, the bottom end of the market is also under pressure, CBRE noted.
Cunningham added: “The drop in the amount of office stock can in part be explained by the general trend towards residential use of buildings within the city centre, which has overtaken the pre-Covid trend of converting office buildings for hotel use.
“Increasingly landlords with Grade B buildings, which need a big investment to bring them into line with their competitors, are reviewing their options in case they can find a higher value use for their asset.”
In Glasgow there is currently 1.4 million sq ft of office space under construction. However, 81 per cent of that is already pre-let or pre-sold to occupiers such as Barclays, HMRC, Virgin Money and JP Morgan.
“The Covid-19 pandemic has, of course, affected the market this year,” added Cunningham. “However, activity in the third quarter was up by 42 per cent from the previous quarter, showing some green shoots of recovery are evident.
“There were over 30 new requirements for office space in Glasgow in the third quarter as office occupiers sought to move to business space that is suitable for the needs of both their workload and, perhaps more importantly, their staff.”