£12m upgrade under way at Atlantic Quay

But while its owners are confident they are coming to market at the perfect time, there is a belief the Glasgow market is struggling to attract new companies to the city.

Glasgow currently has a shortage of Grade A space as more firms desire high-specification buildings with large floor plates, and Ken Barrett, a director at Resonance Capital, which is the joint asset manager with Moorfield Group, said the timing of the upgrade put the firms in an advantageous position.

“There is a window of opportunity with limited competition for us,” he said. “When we go to market there will be the odd 20,000sq ft space, but no-one has buildings of 80,000sq ft. There probably will be some start to come through in 2018, but this year, for this type of space it is a very limited offer.”

Mr Barrett said he was in discussions with agents and potential tenants about pre-letting and there was a “reasonable chance” of at least some of the space being let before the works are complete.

He said that Brexit or a second independence referendum has had no impact from the tenant side but from an investors perspective it was more difficult to raise money to joint venture developments.

“While the indyref is back on the table, it’s become more difficult to raise money to invest in Scotland. The general commercial property investment transactions has gone down. [There has] not been a great impact so far on occupancy. It’s still quite buoyant, people are looking for space, but where it goes from there, I don’t know.”

The full refurbishment will see Atlantic Quay 3 stripped back to the shell, with around half to two-thirds of the £5m spend going towards replacing the building’s service systems. A Nordic-inspired contemporary design will feature throughout, with flexible floor plates across all seven floors designed to accommodate a range of occupiers.

Atlantic Quay 2 is not part of the current plans as Lloyds Banking Group is leased on the site until 2026.

Moorfield Group and Resonance acquired the three buildings at Atlantic Quay for £60.7 million in September 2015, through the Moorfield Real Estate Fund III. The deal was funded from the sale of the Skypark development in Finnieston, which was sold earlier in 2015 to a fund operated by Lone Star.

“The buildings are incredibly well-built.” said Mr Barrett. “[When it opened] it was like Glasgow’s version of Broadgate in London, they were built to a fantastic spec. Externally they are still in very good nick.”

In spite of interest in the refurbished premises, Mr Barrett said that he expected 2017 to be an average year for the commercial property market in the city. “The space that has been taken up and the inquiries we’re getting tends to be people with lease events, expiries coming up and they are looking at rationalising, upsizing or downsizing,” he said. “So they are taking advantage of leases coming up and looking at what they need for the next ten years and moving around.”

Equating the Glasgow market to the parlour game musical chairs, he added: “People are moving, there is good life in the market but if you take out lease expiry events and people just moving their desks to up or downsize, there is very limited new people coming to the Glasgow market.”

He also said the rental market in the city could slow down as moving tenants settle.

“We’re now 25 years on from the peak of the development boom so you’ve got all these expiries coming up, therefore things are moving and refurbs are happening,” he said.

“Once you come out of that window, it might quieten down. I might be pessimistic, but the general trend at the moment is shuffling existing tenants. We are not seeing a great deal of outside activity.”

Mr Barrett said the company would likely put the buildings on the market when the work was complete and the buildings full. “What we tend to do is dramatically refurbish slightly older stock, let it up, get it re-established and sell it again. That tends to take three to five years.”