By Scott Wright

THE Glasgow office market has been tipped to bounce back strongly after coronavirus hammered demand for space in the city in 2020, as new figures suggested Edinburgh had achieved a “remarkable result” in the face of the pandemic.

Take-up of office space in Scotland’s biggest city plunged by 53 per cent as people were advised to work from home for large parts of the year to suppress Covid-19 infection rates.

The drop in take-up was even more steep in the last quarter, dropping 65% compared with the last three months of 2019, as concern grew over the spread of a new variant of coronavirus. People continue to be advised by the Scottish Government to work from home if they can under lockdown conditions designed to bring infection rates under control.

In total, 451,428 square feet of office space was taken up in Glasgow in 2020 with 86 deals completed over the year, down from 169 in 2019.

Despite the downturn in activity, property firm CBRE, which revealed the figures, predicted a strong comeback for the Glasgow office sector this year, though cautioned that take-up would remain “below trend”.

CBRE noted that, as 2020 drew to a close, there were 56 “live requirements” for office space in Glasgow, suggesting demand for 861,100 sq ft. It found that there is currently 22.4 million sq ft in the city, with 1.8m sq ft available. However, the availability of Grade A space “remains critically low”, said CBRE, with 6,440 sq ft free.

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The agent stated that, while there is 1.425m sq ft of Grade A space under construction, 81 per cent of the developments scheduled for completion this year are either pre-let or pre-sold to institutions such as Barclays, HMRC, Opus, Virgin Money and JP Morgan. Speculative developments under construction in Glasgow include 177 Bothwell Street, and Cadworks on Cadogan Street.

Andy Cunningham, senior director of CBRE in Glasgow, said: “Office take-up figures for 2020 show the real impact Covid has had on Glasgow, however, as Scotland’s largest city, Glasgow is also best placed to bounce back with some fantastic, best in class office stock coming to the market in the next twelve months.  It is because of this, and with Glasgow at present facing a critical shortage of available Grade A office space, that we still expect prime rents to rise in the city in 2021 as potential new occupiers battle for what limited premium space there is available.”

Mr Cunningham added: “Whilst we expect take-up levels to remain below trend in 2021, small deals and those driven by lease events are still likely to progress, with larger deals most likely to be impacted. As delayed completions and deferred start dates are predicted for development, we are expecting to see second-hand availability increase. Flexibility in employee working locations will also be a big theme for 2021 as well as the long-term trend of office densification and space efficiency.”

Meanwhile, take-up of office space was down only marginally in Edinburgh in 2020 compared with 2019, though the market in the Scottish capital was skewed by fund management giant Baillie Gifford’s commitment to pre-letting 280,000 sq ft at a new development at Haymarket.

It total, 576,927 sq ft office space was taken up in Edinburgh last year, down 4.3% on the year before. Of the 2020 total, 371,792 sq ft was Grade A, up from 245,451 sq ft in 2019.

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CBRE said there were 91 lettings in Edinburgh in 2020, compared with 149 in 2019, with the largest being Baillie Gifford’s Haymarket deal. Arup took two floors at 10 George Street, spanning 20,000 sq ft, and People's Energy let 17,500 sq ft at Shawfair.

Beverley Mortimer, associate director from CBRE in Edinburgh, said: “As the dust settles, it’s clear that Edinburgh weathered the storm significantly better than was expected... it’s a remarkable result considering the market conditions.”