44 . Glasgow Business February 2016
Continued from page 42>
> Perhaps more significantly
though, 2015 saw a hat-trick of brand new Grade A developments opening in the city centre. 110 Queen Street offers
143,000 sq ſt just off George Square, right in the heart of the city’s central business district. 1 West Regent Street, also
totalling 143,000 sq ſt, has also proven popular with tenants, with just over 33,300 sq ſt remaining. Abstract’s St Vincent Plaza
development landed the year’s biggest new tenant, with KPMG taking 39,705 sq ſt, out of a total 170,000 sq ſt. All three have filled quickly,
with some new entrants to Glasgow, but also a number of business moving from elsewhere in the city. “We’ve seen a trend among
occupiers for upgrading to more high-quality space,” says Audrey Dobson, senior director at CBRE Scotland. “In doing so, they can use the space more intensively and enjoy the lower service
charges which tend to come with more modern, efficient buildings. “For instance, at St Vincent
Plaza, you can have one person to six square metres based on the air conditioning, whereas in an older building you’d have, at best, one person per 10 square metres. Tat makes a big difference in terms of how you occupy the space. “So while the occupational
cost per square foot might be higher in new Grade A buildings, the difference is not as great as it might first seem.” However, while the demand
side of Glasgow’s top-end office market is healthy, Dobson says supply is a source for concern. “Disappointingly there are no
new site starts. Glasgow was first out of the blocks with three buildings, and other regional cities have caught up. While there are a number of refurbishments coming through, it’s very important that a city of Glasgow’s calibre has a pipeline of brand new space,” she says. While agreeing that Glasgow has significant unmet demand for
“Disappointingly there are no new site starts... it’s important that a city of Glasgow’s calibre has a pipeline of brand new space”
new Grade A space, Alasdair Ramsay, Regional Senior Director with Bilfinger GVA in Glasgow, says cities like Glasgow oſten experience peaks and troughs in speculative development. “To have three major
developments all arriving at the same time isn’t uncommon for a city like Glasgow, which generally thrives on the back of developer speculators coming in. It doesn’t tend to evolve through pre-let ‘design and build’ projects. “Developers are currently
being cautious about how active occupiers will be over the next few years. Tere’s a number of variables in the wider economic picture and – while that doesn’t necessarily bear down on the micromarket of a single city – it might influence some of the
bigger developers as to whether they speculate at this point. “My suspicion is that it will
still happen, even if developers are moving a litle bit gingerly. Te first one to jump generally wins the prize, so I wouldn’t be surprised if someone pushes the buton then a couple more follow.” With supply constrained, at
least in the short term, should potential occupiers be concerned about geting a good deal? While the Knight Frank report predicts Grade A headline rents will rise to £30.00 per sq ſt by the end of this year, Ramsay says this isn’t yet the case on the ground. “Headline rents for Grade A
are arguably being maintained, with no significant rises yet, though it’s always possible that might start to creep up as supply
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