Demand for premium offices set to bounce back in Edinburgh and Glasgow

Demand for high-quality office space in Scotland’s biggest cities is expected to recover strongly as lockdown eases, according to a report.

Although many staff are likely to spend more of their week at home in future, employers will still want them to come into offices and will be increasingly keen to provide high-quality working environments, experts from property advisor CBRE said.

They predict that a continuing shortage of Grade A space coupled with strong demand could result in rising rents as the recovery gathers pace.

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Stewart Taylor, head of CBRE’s Scottish office agency business, said that although the impact of the pandemic may lead to changes in working patterns, most employers will still want their staff in for part of the week.

The letting of space at 206 St Vincent Street, Glasgow, was among the deals completed in a subdued first quarter for Scotland's office market. Picture: McAteer Photograph.The letting of space at 206 St Vincent Street, Glasgow, was among the deals completed in a subdued first quarter for Scotland's office market. Picture: McAteer Photograph.
The letting of space at 206 St Vincent Street, Glasgow, was among the deals completed in a subdued first quarter for Scotland's office market. Picture: McAteer Photograph.

“This may mean less space in some cases, but it also means higher-quality accommodation. As restrictions are lifted there are positive signs of a busy second quarter with some healthy requirements to fulfil in both Glasgow and Edinburgh ” he said.

His comments came as CBRE released figures confirming an expected subdued first quarter of activity in Scotland’s two biggest cities.

Office take-up in Edinburgh totalled 89,566 square feet, down 31.4 per cent from the same period in 2020 and down 52 per cent against the five-year, Q1 average. However, CBRE said the 28,000 sq ft of Grade A space transacted during the first quarter demonstrated the healthy appetite for premium space within the city.

Notable deals included Motorola taking space at Caledonian Exchange, Rockstar Games acquiring additional footprint at Holyrood House, and consumer review website Trustpilot taking 9,200 sq ft at St Andrew Square. There were 27 deals in total across the quarter, down by just four from the same period in 2020.

Angus Lutton from CBRE’s Edinburgh office said: “Even with the modest level of take-up in Q1, Edinburgh’s renowned reputation and appeal as a location that occupiers want to operate from has seen it weather the Covid storm reasonably well. With encouraging signs in the first three months of 2021, the capital can be buoyed by the prospect of a strong recovery.”

Prime rents currently sit at £37 per sq ft and CBRE said there is evidence to suggest that by the end of 2021 that figure will rise as demand for limited Grade A space continues.

In Glasgow, take-up totalled 74,641 sq ft, a 62 per cent drop from the same period in 2020 and 64 per cent down on the Q1 five-year average.

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The biggest deal of the quarter was at 2 Cadogan Square, with construction firm Multiplex Europe taking 34,052 sq ft, representing one of the largest Q1 deals of the past five years in Glasgow. Other notable deals included MDDUS taking space at 206 St Vincent Street and Nucleus Financial agreeing a deal at 241-243 West George Street.

Andy Cunningham, senior director at CBRE in Glasgow, said: “Despite the figures across Q1, we are aware of over 640,000 sq ft of live requirements having come to the market since March as office occupiers seek to move to business space that is suitable to the needs of both their workload and, perhaps more importantly, their staff.”

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