Office market in rude health despite lack of supply

Demand for office space in the Central Belt remains high, while the Aberdeen market shows some signs of recovery, a new industry snapshot indicates.

Major deals included Edrington taking up space at 100 Queen Street in Glasgow. Picture: Contributed

Property consultancy CBRE’s latest Office Market Views for Scotland report shows occupier demand on the rise in Aberdeen and Glasgow, in comparison to recent years. And while office supply reached a record low in the second half of 2016 in Edinburgh, there are various new developments set to provide occupiers with “high-quality options” in the coming months, the study notes.

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The Glasgow office market had a “solid” performance with take-up in 2016 reaching almost 664,000 square feet, a 21 per cent increase on 2015. The largest deal in the second half was a 29,890sq ft letting to Famous Grouse-maker Edrington Group at 100 Queen Street. During the year the banking and finance sector scooped 28 per cent of the space with the public sector following at 15 per cent.

Demand in the city is said to remain strong with active requirements of about 800,000sq ft. Available space in Glasgow totalled 1.54 million sq ft, a fall of 10 per cent since the end of 2015. However, the availability of new build space has declined more rapidly, CBRE added, and overall supply levels are now back down to the levels last seen in 2007/08.

In Edinburgh, supply of Grade A space was found to be at a “critically low level”, with the market “crying out for new stock”. Take-up dipped from 442,625sq ft in the first half of the year to 291,198sq ft in the second, though the annual total was ahead of the five and ten year averages.

Angela Lowe, senior director in CBRE’s national office agency team in Edinburgh, said: “With supply at a critically low level, the market needs the new stock to come through.

“There are a number of new developments including Quartermile 3, Edinburgh House, 2 Semple Street and Greenside in the pipeline which will present occupiers with high-quality options in different locations across the city. A new wave of requirements are expected to become active in the early part of 2017.”

Office space take-up in Aberdeen declined to 218,708sq ft in 2016. However, it picked up by 53 per cent in the second half of the year. The boost was down to Orega acquiring 25,408sq ft in The Silver Fin Building and serviced office provider Citibase acquiring 22,082sq ft at 9 Queens Road.