Avison Young releases analysis of Glasgow office markets for Q3 2021
Strategic real estate advisor Avison Young has released its latest quarterly Glasgow office market update, covering the third quarter of 2021.
Glasgow Office Market Bounces Back in Q3, 2021
During Q3, take up in the city centre was 250,659 sq. ft., which was up a massive 66 percent on the 10-year average (165,043 sq. ft.).
For out of town, there was similar substantial demand with a take-up of 131,960 sq. – up by 61 percent than the 10-year average (81,055 sq. ft.)
The extensive research by Avison Young shows that momentum has significantly increased over the past three months.
This comes as occupiers reassess their office needs and target appropriately sized and flexible spaces, introduce hybrid working styles, and look to improve the overall quality of the workspace ahead of a full return to office (RTO) towards the end of 2021 and early 2022.
Despite the national lockdown earlier in 2021, Avison Young predicts that the total year’s city centre take up will likely reach circa 550,000 sq. ft., close to the city centre 10 year average take up of 661,000 sq. ft.
This is exceptional considering the office market, and wider communities, were in full lockdown for most of the first half of 2021.
Avison Young was involved in some significant landlord pre-lettings in Q3 this year. The Student Loans Company secured 75,000 sq. ft on the last building at Drum’s transformational place making project on Glasgow’s waterfront, Buchanan Wharf and at Cadworks, Glasgow’s most sustainable office building, where the first tenant, TLT Solicitors, signed on the top floor. Further pre-lets during the quarter were at 177 Bothwell Street, involving BNP Paribas, Aecom, CBRE and Atkins at 2 Atlantic Square.
When these office developments are completed, they will bring circa 200,000 sq. ft. of new Grade A accommodation to the market. However, Avison Young expects this to let quickly as current occupational demand continues to outstrip supply, with circa 500,000 sq. ft. of immediate requirements looking for accommodation.
Paul Broad, Director and Head of Business Space, Scotland, said:
“It is very apparent that there is no one size fits all approach and every building specification and every occupier requirement, is uniquely different. The improved Q3 take up tells a small part of the story, as businesses slowly return to the office, or are preparing to return to offices, in Glasgow. However, this is just the first chapter and as our markets begin to fully open up we predict that there will be a further increase in activity and a rapid evolution of ‘the office’ in Glasgow, across Scotland and the UK.
“We have been extremely active advising landlords and occupiers on their next generation developments and office acquisitions. This has involved working alongside Avison Young’s sustainability experts to try and future proof office space for the Net Zero Carbon evolution of real estate.”
Alison Taylor, Managing Director of Avison Young, Glasgow, said:
“We expect activity to remain buoyant across all sectors of the market for some time as many occupiers, who have pledged to commit to the UK’s 68% carbon reduction commitment by 2030 realise they cannot necessarily accomplish this in their existing office accommodation. Typically, older or poorly specified offices will need comprehensive refurbishments and upgrades to reduce energy consumption and carbon emissions. Avison Young expects many occupiers looking to relocate to seek out environmentally friendly offices, with many aspiring to secure Net Zero Carbon (NZC) office specification – which can only really be achieved in newly adapted office refurbishments and redevelopments, or by significant adaptation of their existing premises.
“Avison Young is also seeing occupiers shed surplus accommodation, leaving fully fitted opportunities for others. We are seeing this sort of fully fitted accommodation let up quickly, with new opportunities coming to market all the time. Up until now a healthy balance of slow release and quick lettings is maintaining the status quo. For example, in Q3 2021, serviced office provide Landmark took the decision to exit a number of legacy serviced office centres across the UK, including a 25,000 sq. ft. fully fitted, fully furnished and fully cabled office space in 2 West Regent Street. This space will be attractive to occupiers seeking shorter term occupational deals or provide an attractive proposition for flex operators to use as an opportunity to enter the Glasgow market.”
Michael Facenna, Associate Director of Avison Young’s office agency team, said:
“Across all sectors of the market Avison Young has seen a significant positive shift in both take up and enquiry levels, which is encouraging while many offices in the city are still operating on a hybrid or phased return to work basis.
“Staff wellbeing, sustainability and technology have emerged post pandemic not as nice to haves but as essentials.”