Tuesday, September 30, 2023
GVA Grimley research finds Scottish office market holding up well
New research from property adviser GVA Grimley suggests that the demand for office space in Scotland continues to be strong, despite the current economic downturn.
The firm's latest Market Report Scotland suggests the office market in Aberdeen is outperforming those in Edinburgh and Glasgow. However, market confidence in the capital has been enhanced by recent deals, including that which saw Morton Fraser take 40,000 sq ft of space at Quartermile, while development activity in Glasgow remains high.
Commenting on the findings, Keith Aitken, director at GVA Grimley in Scotland, said: "The Aberdeen office market, which has been boosted by oil and energy industry in addition to the associated business and service sectors in the area, has seen prime office rentals reach £30 per sq ft for the first time due to staunch occupier demand.
"This coupled with the considerable amount of development in the pipeline, including Stewart Milne Group's Union Plaza scheme and the refurbishment of Marischal College, means the city now finds itself in an incredibly robust position.
"There's scope for further rental value growth in Edinburgh given the continued lack of supply in the city centre. Glasgow also continues to experience a dearth of Grade A stock, but the amount currently under construction in the city means there is the potential for over-supply of Grade A space in the medium term. This may lead to an increase in incentives and a downturn in pressure on rent."
The report also notes the country's industrial market has witnessed a sustained level of demand in recent months. High levels of take-up and a limited supply of new and second-hand stock in the small to medium range has put pressure on rents in the west of the country, with headline rent levels in Glasgow rising to £6.25 per sq ft.
However, despite retail spending in Scotland remaining higher than that in the UK as a whole, signs of stress are beginning to emerge in the retail market.
Claire Leven, associate director at GVA Grimley, added: "There is evidence that retail rents are stagnating, incentives are increasing and void rates are going up. Retailers are starting to demand more from landlords in anticipation of tougher trading conditions.
"Prime rents in Edinburgh and Aberdeen have remained stable at around £215 per sq ft and £170 per sq ft respectively, while rents in Glasgow have reached £260 per sq ft.
"Edinburgh's planned St James Quarter Development, the 250,260 sq ft extension to Glasgow's St Enoch Centre and Hammerson's Union Square development in Aberdeen will see substantial improvement in the quality of the cities retail offerings."
The firm's latest Market Report Scotland suggests the office market in Aberdeen is outperforming those in Edinburgh and Glasgow. However, market confidence in the capital has been enhanced by recent deals, including that which saw Morton Fraser take 40,000 sq ft of space at Quartermile, while development activity in Glasgow remains high.
Commenting on the findings, Keith Aitken, director at GVA Grimley in Scotland, said: "The Aberdeen office market, which has been boosted by oil and energy industry in addition to the associated business and service sectors in the area, has seen prime office rentals reach £30 per sq ft for the first time due to staunch occupier demand.
"This coupled with the considerable amount of development in the pipeline, including Stewart Milne Group's Union Plaza scheme and the refurbishment of Marischal College, means the city now finds itself in an incredibly robust position.
"There's scope for further rental value growth in Edinburgh given the continued lack of supply in the city centre. Glasgow also continues to experience a dearth of Grade A stock, but the amount currently under construction in the city means there is the potential for over-supply of Grade A space in the medium term. This may lead to an increase in incentives and a downturn in pressure on rent."
The report also notes the country's industrial market has witnessed a sustained level of demand in recent months. High levels of take-up and a limited supply of new and second-hand stock in the small to medium range has put pressure on rents in the west of the country, with headline rent levels in Glasgow rising to £6.25 per sq ft.
However, despite retail spending in Scotland remaining higher than that in the UK as a whole, signs of stress are beginning to emerge in the retail market.
Claire Leven, associate director at GVA Grimley, added: "There is evidence that retail rents are stagnating, incentives are increasing and void rates are going up. Retailers are starting to demand more from landlords in anticipation of tougher trading conditions.
"Prime rents in Edinburgh and Aberdeen have remained stable at around £215 per sq ft and £170 per sq ft respectively, while rents in Glasgow have reached £260 per sq ft.
"Edinburgh's planned St James Quarter Development, the 250,260 sq ft extension to Glasgow's St Enoch Centre and Hammerson's Union Square development in Aberdeen will see substantial improvement in the quality of the cities retail offerings."
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