By Scott Wright

HOSPITALITY operators have underlined their confidence in the long-term prospects for Glasgow by committing to new premises in Scotland’s biggest city – despite the acute challenges currently facing the industry.

New research from property firm Savills has revealed that 23 new outlets opened in Glasgow in 2022, signifying the busiest year for openings in the city in five years. And while the city saw many outlets close, landlords quickly found new tenants for premises, several of which have set up in the city for the first time, Savills has found.

The influx comes in spite of a well-documented cost of doing business crisis, driven by the surge in energy prices following Russia’s invasion of Ukraine and extending to rising pay and food and beverage prices, that has led to a swathe of outlets closing permanently or temporarily.

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Hospitality operators and brewers have also highlighted disruption to festive trading arising from national rail strikes.

However, Savills says operators are looking beyond the immediate challenges and committing to Glasgow for the long term, in some cases by signing leases for up to 20 years.

Research by the firm shows a total of 80,000 square feet of new food and beverage space opened in Glasgow last year, 15 per cent more than the year before.

Independent operators continued to dominate the openings, said Savills, with 65% of all transactions attributed to local entrepreneurs looking to add a new dimension to the city’s food and drink offering. Notable openings included Fat Lobster, Gost, Devil of Brooklyn, August House, and Bao.

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However, Savills reported that larger national operators were also active in the Glasgow market in 2022 and highlighted that the year saw new arrivals such as Cosmo, Fat Hippo and Mowgli. And it noted that it was bar rather than restaurant premises that were most sought after, with openings during the year including a new tap room – and fifth overall – by Innis & Gunn on West Nile Street, and a new cocktail bar by The Alchemist on George Square.

John Menzies, retail director at Savills in Glasgow, said: “The five-year picture of transaction volumes illustrate the bounce back from Covid-19 and is a strong vote of confidence in the ability of our largest cities to evolve and recover. 2023 promises to be another busy year in Glasgow, with well-funded occupiers retaining their appetite for the best-located properties in Scotland’s largest city.

“These sentiments may sound surprising given the acutely challenging trading picture at present, and the F&B sector’s exposure to rising utility costs, the cost-of-living crisis, and the impact of train strikes on city centre visits.

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“With many operators reporting trade down 25% on expectation over the Christmas period, confidence to commit to new properties at the moment is predicated on an underlying optimism that the economic climate will improve as we move past the current year, into 2024 and beyond.”

Mr Menzies said a “real mixed bag” of operators have been committing to space in Glasgow, from local entrepreneurs developing new offers and spotting gaps in the market, to national players.

“There is a constant stream of big operators coming,” he told The Herald. “What we see in the UK is a number of big cities that can compete for the interest of these national brands and Glasgow is firmly on that list.”

He added: “Glasgow has always been a city where people want to have fun and go out. Post-Covid, we have seen a resurgence of people wanting to go out and enjoy themselves, and despite the climate, spend money. That intelligence in the market is not lost on operators who are looking to where to go next.”

Mr Menzies acknowledged there was a “disconnect” between current levels of activity in the property market and the realities that continue to face operators on the ground.

But he added: “Inherently, it is a glass half-full market. It is an optimistic bunch of people that operate in this sector, and they absolutely see a way to get through the tricky spell we are in just now.”

“Bear in mind, some of these occupiers that are taking sites in Glasgow are regularly signing up for long-term commitments. They can be signing leases of 15 or 20 years. They are investing a lot of money in a site to trade and therefore they are taking a medium to longer term view of their business. They are looking well beyond the next 12 months – they are actually looking forward several years. There is still a degree of optimism that once we get 2023 out of the way... things should be on a better footing as we move into 2024 and beyond.”

Mr Menzies said: “There have been some closures, but what we have seen is that properties that have closed in the city centre have not tended to stay closed for very long, and they have been replaced by new and different brands that have been able to come in and reformat the property into hopefully a more profitable venture.”