It does not seem that long ago when the future of offices seemed to be in serious doubt.
Enforced working from home during lockdowns led to talk that companies would require significantly less office space once the pandemic came to an end, as employers and their staff adjusted to hybrid working. The prospect of saving cash by quitting offices or moving to smaller premises may even have been attractive to some firms, especially those which had struggled amid the challenges which arose from coronavirus and its attendant restrictions.
It does not take long for the world to change, though. Now, a little more than four years since the first UK lockdown began, there are distinct signs the office market is on the up, and nowhere more so than in Glasgow.
Without rehearsing the subject too much, the condition of Glasgow city centre has been a cause of considerable concern over recent years. The pandemic exerted a heavy toll on a city that was already under pressure from fundamental changes in the retail sector, while factors such as the cost of living crisis, patchy transport provision, and continued working from home have made life more difficult for the likes of hospitality outlets.
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Footfall continues to lag 2019 levels, and there are undoubtedly parts of the city centre where the landscape looks decidedly depressing.
At the same time, it would be remiss to ignore the green shoots where they are emerging.
Of course, it is very much in the interest of property agents to talk up the prospects of the market. However, evidence has emerged this year of an upturn in demand for prime office space, and notably in the International Financial Services District.
Recent research published by CoStar Group, the property research analyst, pointed to a resurgence in demand for prime office space in Bothwell Street, a key part of the IFSD that has traditionally been home to firms in the city’s financial services sector. Three high-profile companies – PwC, RSM, and Edrington – collectively committed to nearly 40,000 square feet of space on the street in the first three months of the year. It took the total amount of space leased on the street to 140,000 sq ft over a 12-month period.
That such major employers have committed themselves to significant bricks and mortar operations in Glasgow is a vote of confidence in the city. It is good news for the many businesses that rely on passing trade and an acknowledgement of the pipeline of talent that the city's academic institutions and other companies provide.
The talent pipeline was cited recently by US banking giant JPMorgan Chase when it officially opened its brand new hub on Argyle Street, in the heart of the IFSD.
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JPMorgan Chase is far from a newcomer to Glasgow. Indeed, it has been steadily growing its presence there since opening its first base 25 years ago, and with the investment in its new 14-storey office, the bank has made clear that not only is it here to stay, but keen to grow further still. The New York-based institution currently employs 2,600 in Glasgow, which serves as a key technology and software development centre for its global operations, and it is actively looking to add to that headcount.
Lori Beer, global chief information officer, suggested such growth would be possible because of the skills base in the area. “Yes, we are hiring and looking to grow in Glasgow,” she told The Herald. “A number of businesses have developed technology talent in the city and surrounding area, so the quality of tech specialists has continually strengthened in the time we have been here. Once that ecosystem establishes itself, it is a foundation that attracts more top talent – so it is an ever-evolving circle.
“Glasgow has a great pool of talent in terms of the software engineering skillsets we look for. We always want to be where our clients are, and where the talent is.”
The fact JPMorgan Chase has doubled down on its commitment to Glasgow is surely a cause for celebration among those who are keen to see a brighter future for the city. But it is not only occupants that are being drawn to Glasgow.
Yesterday, it emerged that the owner of 122 Waterloo Street, one of the biggest office blocks in the city centre and exclusively occupied by Morgan Stanley, has instructed agents Knight Frank and Cushman & Wakefield to take the property to market.
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The sale of the building is expected to result in one of the biggest office deals in the city this year, assuming it eventually goes to plan. The press statement announcing the news did not identify the current owner of the building, or say for how much it is being sold. However, a report in CoStar News, the property news website, suggested that offers over £54.5 million are being sought on behalf of a private Korean investor. A strong level of interest is expected to be shown in the sale, underlining the attractiveness of prime office space in Glasgow among a broad range of investors.
“The investment picture in Glasgow is improving,” John Rae, head of office at Knight Frank Glasgow, told The Herald. “Part of the reason is the macro-environment – we have more certainty over interest rates and, although there have been some mixed economic data, a greater sense over what direction they should be heading in. With that, buyer and seller expectations have moved closer together, compared to where they were last year.
“With greater certainty, vendors are more willing to test the market and make quality assets – like 122 Waterloo Street – available for sale. The flip side of that is it creates opportunities for those in a position to buy – particularly cash purchasers, unencumbered by high debt costs.
“We anticipate there being interest in Glasgow from across the globe. International investors have been the main drivers of commercial property activity in Scotland in recent years, and we have seen that continuing to be the case with other large transactions in Glasgow so far in 2024.”
It would be an exaggeration to say the upsurge in office deals we have seen this year will of itself lead to a bright future for Glasgow. But at a time of widespread discontent, it is at least worthy of record.
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