The £35m flagship Capella development, soon to become the tallest building in Glas-gow's International Financial Services District, has lured its first major tenant with a rent deal that, according to experts, is likely to be a bargain.
MacRoberts, one of Scotland's biggest law firms, has reserved the top four floors of the Capella - more than 33,500 square feet - at a price suggested by insiders to be £27 per square foot, or £904,500 annually, for a place in At- lantic Quay's new centrepiece.
However, commercial property specialists yesterday told The Herald that the price for office space in the Capella will probably be closer to £24 per square foot "with a pound, maybe two, added on for the top floors because of the views over the Clyde".
One commercial property expert, who asked not to be named, said: "It certainly won't be as much as £27 per square foot. First of all, there will be some kind of incentive package to get tenants in the door, and there will also be a rent-free period, maybe one or two years - that much is a racing certainty.
"There are so many disguises and sweeteners involved in these kind of deals - especially the way the commercial property market is faring - the actual price paid per square foot over the length of the lease may not be known for years."
A spokeswoman for MacRoberts confirmed the length of its lease was 15 years, but she declined to discuss any possible discounts or sweeteners that might have accompanied the deal.
A spokesman for Wilson Bowden, the property developer behind the Capella building, also declined to discuss the details of the lease.
Nonetheless, news of deal will allay fears that commercial property activity in the International Financial Services District and elsewhere in the city is rapidly grinding to a halt.
MacRoberts, which is one of Scotland's commercial law firm, is planning to move its Glasgow operation and 187 staff from its existing premises on Bath Street to Atlantic Quay by the end of the year.
The 11-story Capella building, which scheduled to be completed by August and will form the centrepiece of Atlantic Quay, will cost £26m to build, but after professional fees, landscaping and other associated expenses the total cost will rise to £35m.
Michael Murphy, MacRoberts' managing partner, said: "MacRoberts have made a very bold decision to secure what we consider to be the best office location in Glasgow for our business."
The deal comes at a difficult time for the city's beleaguered commercial property sector, which in the International Financial Services District and elsewhere has spelled opportunities for patient bargain hunters.
Jim Fitzsimons, chief execu-tive of the Capella Group which is managing the development on behalf of Wilson Bowden, said: "The commercial property sector, like the rest of the economy, is operating in a challenging environ- ment which is why this announcement is extremely encouraging, both for the sector and for Glasgow.
"It has always been our goal to transform Atlantic Quay into a vibrant business quarter and by providing high-quality business space, we've been able to attract high-calibre tenants such as MacRoberts."
More than 12,000 people now work in the Broomielaw area.
Asked to characterise the current state of Glasgow's commercial property sector, a Wilson Bowden spokesman added: "It has slowed - but it's not totally dead."
Glasgow City Council earlier this month agreed to bring into force a range of measures to protect the city's once-booming commercial property industry from falling victim to the credit crunch - in itself a measure of the concern over state of the sector.
As the credit freeze con- tinues to bite amid the persistent chill in lending from banks, and as job cuts remain rampant as businesses retrench, and empty office space becomes increasingly difficult to fill, growing legions of developers are either withdrawing completely from land purchases for proposed projects or deferring them until the economy recovers.
As part of the city's version of a national government-style economic stimulus package, the council has made available to developers £3.7m in stopgap funding and it has also promised to ease up on its oft-times notorious bureaucracy.
Triggered by the worst economic turmoil in decades, commercial property values in Scotland are estimated to have slipped 20% over the past year, thus aggravating an already precarious situation.
Nonetheless, referring to the MacRoberts deal, George Ryan, executive member for development and regeneration at Glasgow City Council, said: "Such a move reinforces the message that significant development continues in Glasgow and that the city is very much open for business."
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