Pandemic fails to derail Glasgow office market rebound: rents to rise

Momentum is building for Glasgow office space with take-up almost doubling in the second quarter of 2021, a fresh snapshot of activity in the city suggests.

The city centre recorded 112,087 square feet of take-up between April and June, a near-80 per cent increase from the first quarter of the year, according to property consultancy Savills The firm said it had advised on 64 per cent of all deals in the quarter, based on square footage.

While total first-half take-up is down by about 23 per cent compared to the same period last year, the latest second-quarter take-up figure is 287 per cent ahead of Q2 2020 take-up.

Banking (11 per cent), serviced office (10 per cent), and the property company, development and construction (10 per cent) sectors were the most active in the first half of this year, the firm noted. It said the “continued flight to quality” has meant rents in the city continue to remain robust and are expected to increase over the course of this year.

Glasgow city centre recorded 112,087 square feet of take-up between April and June, a near-80 per cent increase from the first quarter of the year, according to property consultancy Savills.

David Cobban, director in the office agency team and head of Savills Glasgow, said: “The first half of 2021 has experienced a real surge of activity despite continued restrictions put in place to control the Covid-19 pandemic.

“While a number of deals have taken longer to complete, as new and refurbished space hits the market we are seeing strong demand and competition to secure this high quality space as occupiers anticipate a return to work.

“This flight to quality has supported the rent levels in the city and the underlying activity in the market points to continued upwards pressure on rents and a resurgence of activity across the market from large and smaller requirements. We expect this level of activity to continue over [the second half of] 2021 and rents to increase.”

Savills’ snapshot chimes with figures released last week by commercial property advisor CBRE. It found that Scotland’s two biggest cities have seen “significant” office letting activity in the second quarter amid predictions of a further recovery as people eventually head back to their workplaces.

Take-up for the Glasgow office market totalled 118,628 square feet in the period from April to June, according to the firm’s analysis, up 94 per cent up from the same period in 2020 when the first lockdown hit the market hard.

The biggest deal of the quarter in the city was at 200 Renfield Street, with Instant Offices, care of DWP, taking 35,787 sq ft across two floors. This was a building which CBRE subsequently purchased on behalf of a client, MRP.

There was also more pre-let activity at 177 Bothwell Street with BNP Paribas letting 20,600 sq ft in a deal in which CBRE advised on.

In Edinburgh, office take-up totalled 158,367 sq ft in the second quarter. This is a 77 per cent increase from the previous quarter and a 489 per cent jump against the year-on-year figure.

While take-up is still down on the five-year average, the second quarter is 49 per cent up from the pre-pandemic levels of the closing quarter of 2019 and is expected to improve even further with a “large number” of deals remaining under offer.

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