THE Scottish asset manager which runs Glasgow’s massive Skypark business complex on behalf of Hermes has revealed the investment giant is drawing up major plans to expand the property.
Glasgow-based Resonance Capital returned to run Skypark for a second time after the deal which saw Hermes Investment Management acquire the Finnieston site from Lone Star in March.
Resonance had operated the 550,000 square foot (sq ft) business park for five years after acquiring the property in a joint venture with private equity firm Moorfield in 2010, before the asset was sold to Lone Star for a reported £80 million in 2015.
It then worked with Lone Star as Skypark’s asset manager for a further year, before exiting to focus on the Atlantic Quay buildings on Glasgow’s riverside, in a joint venture with Moorfield.
Now Resonance is back at Skypark and advising Hermes on ambitious plans which could see the site’s capacity double in size.
Angela Higgins, who founded Resonance with Ken Barrett, said Hermes is looking at building more office space on two locations on either side of the current site. It is also looking at developing the central roadway which runs through the Finnieston site as it seeks to give the space a “campus” feel, with communal spaces for tenants and leisure options such as bars and restaurants added.
Ms Higgins, who was unable to specify the value of investment under consideration, said: “The site is currently 550,000 [square feet]. One of the sites next door could be quarter of a million (sq ft), and the other could be 140 or 150 [thousand sq ft], so you could almost double the size of the location. That begins to tell you how much you might be able to change [the site]. Then it becomes much more like a Finnieston quarter in its own right.”
Ms Higgins added: “From a personal point of view, I just feel really delighted that we have persuaded a fund as good as Hermes to actually invest that amount of money in Glasgow. You could see them spending up the same again [in developing Skypark]. I feel it is a big vote of confidence to get Hermes to invest in Glasgow. They will be here for five to seven years investing in the city.
“There is real opportunity for this to help improve the cityscape by bringing a decent chunk of money out of London.”
Skypark currently spans six buildings and is home to around 4,000 employees. It hosts numerous companies in the tech sector, including internet of things specialist Stream Technologies, now part of Arm Holdings, and pioneering satellite firm ClydeSpace, now owned by Swedish firm AAC Microtec following a £26m deal last year.
Ms Higgins, who said 12 of the 50 tenants at Skypark are technology firms, would like the firm to forge closer links to the media sector, given Skypark’s proximity to Pacific Quay, where the BBC and STV are based. As part of that drive, Skypark will host a technology and visual effects festival in September, at which there will be demonstrations from ClydeSpace and Axis Animation.
However, while Resonance reports strong demand from potential tenants for office space, Ms Higgins warned Brexit uncertainty means investor appetite to acquire commercial property in Scotland is currently muted.
“Investor sentiment is very fickle just now, very wobbly indeed,” she said. “There was huge interest in Atlantic Quay 1 when we were selling that because it was long-term income [being generated from the property]. If you’ve got long-term income you will be popular. Everything else, everyone is very nervous about Brexit. It’s definitely driven funding off the landscape."
She added: “There’s not that many people who want to sell, because there is a gap between what they see it (property) is worth, and what anyone is willing to pay at the moment. Everybody feels frightened about what the outcome is going to be.”
Despite the uncertainty, Ms Higgins said Resonance has aspirations to grow its portfolio.
While it has no equity stake in Skypark, it holds a stake in Atlantic 1 and 2 in partnership with Moorfield, and Ms Higgins said Resonance would be keen to invest in a smaller office property in Glasgow in its own right. And she hopes to secure a property via the joint venture model by the end of the year, targeting deals in the £25m to £30m bracket.
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