Savills calls The Year of The Pre-Let in 2018 - Glasgow

21 December 2017

2018 will be ‘the year of the pre-let’ in Glasgow’s offices market according to international real estate advisor Savills. The firm said that a lack of new Grade A office supply and limited opportunity for speculative development should incentivise occupiers with upcoming lease events to commit to pre-lets if they are to secure the best new buildings in the city.

With significant lease events in 2021 / 2022 Savills says large occupiers that are looking to move need to make a decision on a pre-let in 2018 or face missing out on the best sites while lowering their leverage on a good deal. Key sites to watch include Bothwell Exchange at 177 Bothwell Street, 33 Cadogan Street and The New Exchange on Cadogan Street.

Grade A office supply continues to dwindle in Glasgow, accelerated in 2017 by demand from the public sector with the Scottish Courts and Tribunals Service (SCTS), OFGEM, The Department for Work and Pensions (DWP) and the Student Loans Company collectively committing to over 220,000 sq ft (20,438 sq m) of office space in the last 12 months.

Refurbished office space will continue to cater for demand, and Savills says occupiers unable to wait for the delivery of new buildings can expect to pay £28 per sq ft for good quality refurbishments in 2018, only circa £2 per sq ft below the current new grade A headlines.

David Cobban, director in the business space team at Savills Scotland, comments: “There has been a lack of inward investment into Glasgow in recent years due to uncertainties around local politics but we are starting to see developers and investors look at the city again. This could spark new developments and create liquidity in the offices market as occupiers are given more options.

“Investment through the Glasgow City Region City Deal will help to stimulate increased interest in the city centre and whilst this will be particularly pertinent for residential developments, and mixed use schemes incorporating residential, it could create a catalyst to unlock sites that have been undeveloped for a  few cycles.  However in the near term occupiers looking for new office space in 2018 will have to commit to pre-lets or opt for refurbished space.”


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