2015-12-31-莱坊-Glasgow_Office_Market_Report_2016_6页_568kb

Glasgow Office Market Report Summary (2016)

Core Content

The Glasgow office market in 2016 continued to show resilience and growth despite the political uncertainty caused by the EU referendum. The city's reputation as a business and lifestyle destination has strengthened, attracting both corporate occupiers and investors. Key themes include the limited availability of Grade A space, increased demand in the city centre, and the potential for rental growth in Grade B+ markets.

Main Points

Market Overview

• Glasgow's reputation as a business and lifestyle destination is growing.
• The office market has remained strong, with occupiers, investors, and developers showing sustained interest.
• "Let Glasgow flourish" encapsulates the city's potential to compete globally.

Occupational Market

• Office take-up in the first half of 2016 reached 806,700 sq ft, a 16% increase compared to the same period in 2015.
• City centre take-up was 475,000 sq ft, more than double that of 2015.
• Large-scale deals in the city core included:
  • Morgan Stanley (154,800 sq ft) at 122 Waterloo Street.
  • ACCA (55,750 sq ft) at 110 Queen Street.
  • AXA (49,250 sq ft) at Cuprum, 480 Argyle Street.
  • KPMG (39,700 sq ft) at St Vincent Plaza.
• Occupiers are moving from the periphery to the core CBD for better working environments and proximity to amenities.

Availability

• Total availability in September 2016 was 1.95 million sq ft, a 22% decrease from 2015.
• Grade A availability in the city core is at the lowest level on record (125,000 sq ft).
• No speculative developments are under construction at the time of the report.
• Refurbishment projects are ongoing, with over 250,000 sq ft in the city core.

Headline Rents

• Prime headline rents at the end of Q2 2016 were £29.50 per sq ft.
• Forecast suggests prime rents could surpass £30.00 per sq ft within the next 12 months due to limited supply.
• Confidential or low rent deals are common, especially for large occupiers.

Investment Market

• Investment volumes were significantly lower in 2016, reaching £70m by mid-year, a 45% decrease from 2015.
• Major investment deals included:
  • 2 West Regent Street sold to TIAA Henderson for £31.50m (NIY: 5.84%).
  • The Grosvenor Building on Gordon Street bought by UBS for £17.85m (NIY: 6.9%).
• Foreign investors played a key role, with over one third of purchasers in 2015, though activity slowed in 2016 due to market uncertainty.
• Prime yields were at 5.50% by mid-year, 100 basis points above the 2007 peak.

Key Information

Development Trends

• Speculative development restarted in 2012/13 with projects like Abstract, BAM, and Clearbell/M&G.
• These developments have led to increased demand and stronger market confidence.
• A two-year lag is expected before new Grade A stock enters the market, driving refurbishment activity and rent increases.

Strategic Recommendations

• A coordinated approach between local authority, Scottish Enterprise, and Invest Glasgow is needed to enhance Glasgow's profile.
• Retention of Scottish talent from leading universities is crucial for attracting global occupiers.
• The lifestyle destination aspect is growing, with areas like Finnieston becoming popular.
• Infrastructure improvements and continued development will be key to solidifying Glasgow's status as a global city.

Market Outlook

• Rental growth in Grade B+ markets is anticipated due to limited Grade A stock.
• Yields are expected to harden as more stock becomes available.
• Overseas interest is likely to increase as market sentiment improves, especially with the depreciation of sterling and attractive yields.

Key Players and Contacts

• John Rae, Managing Partner, Knight Frank Glasgow:
  Email: john.rae@knightfrank.com
  Phone: +44 141 566 6029

• Colin Mackenzie, Partner:
  Email: colin.mackenzie@knightfrank.com
  Phone: +44 141 566 6024

• Patrick Ford, Partner:
  Email: patrick.ford@knightfrank.com
  Phone: +44 141 566 0880

• Peter Leburn, Associate:
  Email: peter.leburn@knightfrank.com
  Phone: +44 141 566 6018

• Lee Elliott, Head of Commercial Research:
  Email: lee.elliott@knightfrank.com
  Phone: +44 20 7861 5008

• Darren Mansfield, Associate:
  Email: darren.mansfield@knightfrank.com
  Phone: +44 20 7861 1246

Disclaimer

• This report is for general information only and should not be relied upon for decision-making.
• Knight Frank LLP does not accept any responsibility or liability for losses or damages resulting from its use.
• Reproduction of this report is not allowed without prior written permission.