Maxim drives surge in empty office space

THE number of offices lying empty in multi-million-pound projects such as Lanarkshire’s embattled Maxim development is laid bare in a report today, which shows vacancy rates across Scotland’s business parks have hit record highs.

Figures from property consultancy GVA Grimley show that uptake of space in business parks fell in the first six months of the year while floor space availability rose by 11.4 per cent to 2.8 million square feet as the effect of recently-completed projects filtered through to the market.

Contracts were exchanged for just 134,000sq ft of space during the period – less than half of the total in the previous six months and 20.5 per cent below the current five-year average.

The surge in unoccupied space has been driven by last year’s completion of the £330 million Maxim business park, the biggest speculative office development in the UK with 750,000sq ft across ten buildings at the Eurocentral site beside the M8.

Alison Taylor, director at GVA, said the opening of Maxim with few tenants – despite heavy marketing through 2008 and 2009 – was a “bad statement to the market”.

However, there have more recently been some signs of improvement around the Glasgow area, as the amount of available Grade A city centre space has fallen to 270,000sq ft from 900,000 q ft at the beginning of 2008. With only two sites currently able to accommodate a letting of 50,000sq ft, larger tenants will be forced to look out of town, she said.

“Businesses don’t normally want to wait around while something is being built, and there is no development pipeline in the city centre at this time,” Taylor said. “Even if somebody went on site right now, nothing would be available until 2014 at the earliest, and there aren’t any signs of projects about to get started.”

Maxim, owned by the Tritax Eurocentral EZ Unit Trust, appears to have benefited from this after the Scottish Environmental Protection Agency (Sepa) agreed in July to take up 60,000sq ft of space. There are rumours that other government agencies may follow, but even with the Sepa deal, less than 13 per cent of the development is currently let.

But despite record levels of vacant space, Taylor said prime headline rents remained steady across the country during the first half of this year.

“What we are seeing is encouraging, and perhaps the beginning of a trend, but to be honest, it is too early to tell,” she said. “It really is a case of mixed messages.”

Maxim’s deal with Sepa should significantly boost take-up figures in the second half, as will a deal signed by ScottishPower to lease 85,000sq ft at Hamilton Business Park.

Looking at the broader Scottish market, a total of 285,000sq ft of floor space was under construction in the first six months of 2011.

The most notable deals in the first half’s poor tally included the letting of 38,000sq ft to Wood Group at Strathclyde Business Park, which will also be the home for Spanish wind turbine manufacturer Gamesa’s new offshore wind technology centre.