Tuesday, December 16, 2023
Lambert Smith Hampton predict £30sq ft office space in Glasgow in 09
A new report from Lambert Smith Hampton (LSH) predicts that office rents for the best space in Glasgow will reach £30 per sq ft during 2009.
LSH's Glasgow City Centre Office Report 2008/09 provides an extensive analysis of the city?s office market and forecasts that take up in the city is likely to be 300,000 sq ft in 2008 compared to a ten year average of 500,000 sq ft.
The report recognises that detrimental effect that the economic slowdown is having on occupational demand but identifies that severe lack of Grade A is a contributory factor and greater availability of space would have resulted in take up for the year being much closer to the average.
David Smith, Head of Office for LSH in Scotland said: "It is no surprise that take up is down and while 2009 will see a number of new developments becoming available that will satisfy pent-up demand for Grade A space it is likely that the release of this space will create a period of oversupply by 2010. This will be short lived as further development is unlikely to be brought forward while economic pressures persist. The unknown factor is how many existing occupiers will be forced to place surplus space on the market and we also foresee that there will be an increasing differentiation between the highest quality developments and budget space.
"In the current tough economic climate, being aware of occupier's needs could make the difference between letting a building or leaving it empty. Our recent Occupier?s survey shows that while 48% of occupiers intend to stay in their premises, 25% intend to consolidate into one building and 30% plan to move due to lease expiries or in order to upgrade their premises.
"Many occupiers are becoming more prepared to pay for flexibility, with 46% willing to pay 5% more in rent for occupational flexibility and 15% willing to pay up to 10% more."
Whilst the occupational markets throughout the country remain uncertain due to increasing concerns of recession, Glasgow currently has the lowest vacancy rate (3.7%) of any major office centre in the United Kingdom (average 9%) and even with the completion of the developments currently in the pipeline, the vacancy rate will still remain below the national average at 7.25.
This limited supply of modern Grade A space is likely to put upward pressure on rents over the medium term and coupled with the current discount on investment yields, Glasgow offers an outstanding opportunity for investors to take advantage of a recovering market over the next 12-24 months.
LSH's Glasgow City Centre Office Report 2008/09 provides an extensive analysis of the city?s office market and forecasts that take up in the city is likely to be 300,000 sq ft in 2008 compared to a ten year average of 500,000 sq ft.
The report recognises that detrimental effect that the economic slowdown is having on occupational demand but identifies that severe lack of Grade A is a contributory factor and greater availability of space would have resulted in take up for the year being much closer to the average.
David Smith, Head of Office for LSH in Scotland said: "It is no surprise that take up is down and while 2009 will see a number of new developments becoming available that will satisfy pent-up demand for Grade A space it is likely that the release of this space will create a period of oversupply by 2010. This will be short lived as further development is unlikely to be brought forward while economic pressures persist. The unknown factor is how many existing occupiers will be forced to place surplus space on the market and we also foresee that there will be an increasing differentiation between the highest quality developments and budget space.
"In the current tough economic climate, being aware of occupier's needs could make the difference between letting a building or leaving it empty. Our recent Occupier?s survey shows that while 48% of occupiers intend to stay in their premises, 25% intend to consolidate into one building and 30% plan to move due to lease expiries or in order to upgrade their premises.
"Many occupiers are becoming more prepared to pay for flexibility, with 46% willing to pay 5% more in rent for occupational flexibility and 15% willing to pay up to 10% more."
Whilst the occupational markets throughout the country remain uncertain due to increasing concerns of recession, Glasgow currently has the lowest vacancy rate (3.7%) of any major office centre in the United Kingdom (average 9%) and even with the completion of the developments currently in the pipeline, the vacancy rate will still remain below the national average at 7.25.
This limited supply of modern Grade A space is likely to put upward pressure on rents over the medium term and coupled with the current discount on investment yields, Glasgow offers an outstanding opportunity for investors to take advantage of a recovering market over the next 12-24 months.
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