Firms eager to secure a footing in the city are set to push rents to recordbreaking highs, reports Bob Serafini

ENCOURAGED by the fact that more than a dozen leading name companies are out and about actively seeking new office space in the city centre, Glasgow agents are predicting a rise in prime rent levels to a record £30 per sq ft by the end of this year. Two core business district office towers at 1 West Regent Street and 110 Queen Street are both around 50 per cent pre-let or under offer as they reach completion, and expected to be virtually full before Christmas.

This follows a good first quarter performance, with figures from Cushman & Wakefield showing 36 city centre deals (134,433 sq ft) - the largest seeing Weir Group sign up for 25,514 sq ft, and a further 41 deals out of town (130,886) with Webhelp taking 33,217 sq ft at Citypark. Newcomers to Glasgow include stockbrokers Rathbone Brothers, moving into 8 Nelson Mandela Place, while financial advisers Bellpenny took space at 180 West George Street.

The list of occupiers known to have current requirements includes, for example, legal and professional services firms Atkins, KPMG, Cameron McKenna and DWF, transport group Abellio, engineers Jacobs, Registers of Scotland, whisky firm Whyte & Mackay, House of Fraser and AXA Insurance. The company with the largest need, Morgan Stanley, is believed to have narrowed down their search for 170,000 sq ft to a couple of site options for new build.

The St Vincent Plaza development nearing completion alongside the M8 motorway could have met the size brief, but the financial sector giant is understood to be two years away from its relocation move. Abstract's SVP building is, though, likely to be the main beneficiary as new Grade A supply dries up and has taken a value for money approach with rentals from £23 per sq ft.

Andy Cunningham, business space partner at Cushman in Glasgow, is one adviser who tends to shoot from the hip rather than just talk the market up - but is very positive about the current situation. "There are lots of people out in the market, doing viewings, asking for leasing terms, talking about offices, and the poor old letting agent - who has been through horrible times in recent years getting doors slammed in our faces - is now enjoying the job once again," he said.

"The market has suddenly come to life with plenty of enquiries for everyone. I think we are about to enter a danger zone for tenants, where rents are going to go up and incentives down. If tenants are nimble, they may just get the space they want, but with some potential occupiers the time taken to reach decisions is like turning round the Queen Mary and they could get gazumped. "Our forecasts predict rental growth for Glasgow over the next four or five years and, with a lot of leases either running out or with a break coming up, there will be developers and investors starting to think the time could be right to do speculative offices."

GVA James Barr director Alison Taylor says take-up in Glasgow is 20 per cent above the five year average, with the city benefitting from being the first of the big nine UK cities to undertake speculative development post-recession. "Prime office rents, currently £29 per sq ft, are tipped to breach £30 in the next batch of lettings as no new stock is currently in the pipeline," she said.

"A number of developers are going through planning at present and some are reviewing their funding arrangements. "There are pre-letting enquiries for the city, with occupiers starting to look ahead to 2017/2018. "However, they may be disappointed as at present there are no developers committed to space coming out of the ground. The market eagerly awaits news of the next phase of prime offices coming on stream to meet this anticipated future demand."

IN BRIEF

Newcomers old hands at property game

THERE must have been an eyebrow or two raised when DougraySmith was announced as winner of the 'Best Newcomer' category at the UK Property Awards in London last week. The real estate advisory firm was set up 12 months ago by Scots Chris Dougray and David Smith, both of whom are approaching 50, and among the best known property veterans north of the border.

The former Lambert Smith Hampton directors work directly with a small number of clients and have had a whirlwind year, advising on more than £300m of deals and with £100m of sales currently in the market.

Major projects include Interserve Developments' 650,000 sq ft project next to Haymarket Station in Edinburgh. "As the only Scottish nominee, we are especially pleased," said Dougray. "The other nominees in our category are excellent organisations and the result came as quite a surprise."

Change of leadership at DTZ

DTZ has a new boss in Scotland, with Stuart Dorward taking over the reins from long serving James Thomson. As Business Manager for Scotland, he assumes overall responsibility for the adviser's offices in Glasgow and Edinburgh, which service DTZ's regional business and global clients active in Scotland.

A graduate of Glasgow Caledonian University, Dorward has been with the firm for 11 years, most recently heading its project and building consultancy division. He said: "As the economy continues to recover, and with backing from the TPG consortium (a leading global private investment firm), we are in an exciting phase of development for our business, both locally and globally.

My role is to capitalise on these opportunities and optimise our services for clients." Thomson will continue to lead the Edinburgh office.