Q3 take-up activity in the Glasgow office market amounted to 63,852 sq ft in the city centre and 58,379 sq ft out-of-town. This brings total take-up to a similar level as Q2, around half the ten year quarterly average. This is not surprising given the tighter government restrictions for office occupation since lockdown in March.
There were two stand-out deals in the city centre, 28,388 sq ft to Westcot Credit Services, which is the expansion of an existing contract and a long-standing requirement to Chubb, which has taken 18,250 sq ft. This is less space than previously required but there is an option to expand to an additional floor. In the out-of-town market the public sector secured 22,400 sq ft at Glasgow Airport Business Park and NHS 24 has agreed a 13,700 sq ft deal at Lumina Building, Hillington Park.
We expect further re-gears, particularly for the public sector as capital budgets are under pressure and imaginative ways of leveraging capital from the private sector will need to be considered. From a property perspective we anticipate an increase in lease extensions and sale and leasebacks to help mitigate some occupiers’ income shortfalls.
With a number of companies undertaking work space reviews due to Covid-19, we are expecting occupiers to focus on better-quality space, with some considering at least a 20% reduction in footprints, and others expanding to accommodate more social space for staff. These strategies fit well with the drive for more sustainable buildings and a greater emphasis on wellbeing and wellness in office design.
With no sign of any ability to return to the office indicated by the Scottish Government, we are also expecting some grey space to return to the market over the next few months. However, with limited stock and sustainable levels of occupational demand anticipated due to significant lease events over the next 12 months, we expect the headline rents and incentives to hold firm. Market fundamentals remain robust in Glasgow.
TAKE UP Q3
63,852 sq ft
Out of Town
58,379 sq ft
£34.50 per sq ft
Out of Town
£16.50 per sq ft
1.4 million sq ft
TOP FIVE DEALS
KEY SECTOR ACTIVITY FOR Q1-3 2020
Education and training
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