Scotland’s commercial property market must embrace sustainability to thrive - Manish Chande

Scotland’s commercial property market is undergoing a profound shift. Once seen as a ‘nice to have’, sustainability is now a non-negotiable requirement for occupiers. The increasing demand for environmentally responsible buildings is reshaping how developers approach office space, with sustainability no longer just a trend, but a fundamental part of the equation. However, this surge in demand for greener, more energy-efficient workspaces is hitting a significant roadblock – supply.

Across Scotland’s major cities, including Glasgow and Edinburgh, the availability of Grade A, sustainable office space is critically limited. In Glasgow, JLL’s Q3 2024 Big 6 report shows steady office take-up of 102,700 sq ft, but a constrained development pipeline is leaving occupiers with limited options. Similarly, in Edinburgh, leasing activity rebounded in Q3 with 167,300 sq ft transacted – a 48 per cent increase on the previous quarter – driven by demand from the banking, finance and professional services sectors. Yet, high-quality space remains scarce, with Grade A vacancy at just 2.1 per cent. The flight to quality is evident, with modern, sustainable buildings commanding high demand, while older stock struggles to meet growing sustainability standards.

This demand is reflected in the Royal Institution of Chartered Surveyors (RICS) Sustainability Report 2024, which found that 46 per cent of respondents in Scotland reported a rise in occupier interest in green buildings over the past year. However, the same report highlights significant barriers to progress. High initial costs of sustainable construction were cited by 66 per cent of respondents, while 31 per cent pointed to a lack of government incentives and policy clarity. Furthermore, only 21 per cent of respondents currently measure biodiversity on all projects, and 41 per cent have yet to incorporate embodied carbon assessments into their work. These challenges highlight the need for a more strategic approach to sustainability across Scotland’s property market.

An artist’s impression of ​the One Five Zero St Vincent Street development

The role of sustainability in real estate

The importance of sustainable office space extends far beyond the property sector. With COP29 reigniting the global focus on climate change, Scotland must ensure its economy remains competitive on the international stage. Achieving the country’s ambitious net-zero targets for 2045 will require the real estate sector to play a central role in reducing emissions and adopting greener practices.

For businesses, the case for sustainable workspaces is equally compelling. As organisations strive to attract and retain top talent – particularly in sectors like technology and finance – offering modern, environmentally-conscious office environments is becoming a key differentiator. Today’s workforce prioritises sustainability and wellbeing, and employers who fail to meet these expectations risk falling behind, both in the race for talent and in aligning with broader societal goals.

Green shoots in Glasgow

Manish Chande, Senior Partner at Clearbell Capital

While the current supply of sustainable office space in Scotland is limited, there are green shoots beginning to emerge. One such example is the proposed redevelopment of One Five Zero St Vincent Street in Glasgow, a project by Clearbell that is set to create a new benchmark in the city’s office market. The plans for this redevelopment are not just about expanding the size of the building, but about redefining what sustainable office space can look like.

Set to deliver 146,492 sq ft of Grade A office space, the project is designed to achieve operational net-zero carbon and leading sustainability certifications, including BREEAM ‘Outstanding’ and NABERS 5*. It also places a strong emphasis on occupant wellbeing, with plans for ample green space, a dedicated wellness floor, an auditorium that will allow for town hall meetings and enhanced community feel, along with extensive bike storage and electric vehicle charging facilities. It’s a clear demonstration of what’s possible when sustainability is embedded at the core of development.

However, this development is not just an isolated example. It demonstrates the potential for future developments in Glasgow and beyond, where sustainability and design excellence come together to address both the demands of occupiers and the needs of the environment.

As sustainability continues to rise to the top of the corporate agenda, the demand for buildings that meet these standards will only increase. The businesses that can adapt to this demand and secure the right spaces will not only be leading the charge in the green economy, but they will also be positioning themselves for success in the competitive global marketplace.

Manish Chande, Senior Partner at Clearbell Capital