BIG deals involving banking giants helped Glasgow to a record year for office lettings, kick-starting the development pipeline.
Office take-up in Glasgow in 2018 topped 1.4 million sq ft to with activity marking a 127 per cent increase on the year before, while also 85% ahead of the five-year average, says international real estate advisor Savills.
The search for space was led by Barclays taking a 470,000 sq ft pre-commitment deal at Buchanan Wharf, Clydesdale Bank signing for 110,955 sq ft at 177 Bothwell Street and HMRC taking 60,556 sq ft at 123 St Vincent Street.
Grade A availability in Glasgow dropped to 280,000 sq ft, marking a 34% fall on 2017 levels, and rents climbed to £32.50 per sq ft for the top Grade A rentals and £30 per sq ft for the best refurbished office space.
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Glasgow also witnessed the ongoing expansion of the serviced office sector in 2018 with Spaces - which took 50,000 sq ft - and Orega, taking 25,000 sq ft, committing to new space in 2018 and known requirements in the market from WeWork, of up to 100,000 sq ft, and the Office Group of 40,000 sq ft.
The growth of the serviced office sector is eating into the sub-2,000 sq ft leasing market, says Savills, and landlords of this size bracket will need to be flexible if they are to be competitive in future, it warned.
Colin McGhee, associate director at Savills in Glasgow, above, said: "The confidence in the market as a result of a number of significant office lettings and pre-lettings completing, combined with much-anticipated development finally getting under way, has resulted in a stellar year of office take-up that is driving up rents and encouraging further new developments to move forward."
The agency also said that the ongoing supply and demand imbalance could see pre-lets kick-starting further development sites in the city.
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With relative room for office rental growth in Glasgow compared to other UK regional cities, Savills anticipates rents will rise further in 2019 allowed for by evermore new developments and large requirements such as JP Morgan Chase and Scottish Social Security Agency suggesting letting demand is unlikely to wane.
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