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In recent weeks, CoStar have published a number of in-depth articles looking at Glasgow’s commercial property market. Read on for their full analysis.
Spotlight on Glasgow – Offices
Glasgow’s office market is poised for a period of considerable change, with the transformation of the area known as the International Financial Services District (IFSD) at its forefront.
Occupiers and investors are once again flocking to the area between the Broomielaw and St Vincent Street in the City Core. With almost 1m sq ft of known occupier requirements and a shortage of available new build office space, construction activity looks set to ramp up.
Barclays is planning a major expansion in Glasgow and is finalising plans for an office campus spanning at least 470,000 sq ft on the south bank of the River Clyde.
JP Morgan, too, is considering options for a major campus move in the city, while Morgan Stanley and, more recently, Clydesdale Bank signed 100,000 sq ft-plus prelets.
Serviced office firms are also expanding across the city. Spaces recently opened its third (and largest) Glasgow location at 1 West Regent Street, while the arrival of global co-working giant WeWork is imminent.
One of the reasons behind Glasgow featuring in these firms’ expansion plans is that it has become a hotbed of startups, with almost 8,000 formed in the city (and almost 14,000 across the City Region) since 2016, more than anywhere else in Scotland (according to Startup Britain). Institutional and overseas investors have both been very active in Glasgow of late. More than £700 million was invested in Glasgow offices in the year to March 2018, making it the UK’s second most invested-in regional office market in that time, after Manchester.
Click here to access CoStar’s latest Glasgow office market report (CoStar login required).
Spotlight on Glasgow – Retail
Glasgow’s city centre retail offer ‘The Style Mile’ focuses around the ‘Golden Z’ of Sauchiehall Street, Buchanan Street, and Argyle Street; Merchant City; and the three principal shopping centres of Buchanan Galleries, St. Enoch and the upmarket Princes Square.
While the challenges facing the retail sector have been well documented of late, Buchanan Street – regarded by many as the UK’s best retailing street outside of London – is still going strong. Its prime pitch continues to welcome new tenants willing to pay top rents.
Victoria’s Secret and Nespresso recently joined the likes of Hotel Chocolat, Levi’s, Scribbler and Swatch, almost all of which are paying more than £300 psf Zone A. Investor demand for prime retail assets in Glasgow remains healthy, with recent deals achieving yields in the region of 4%. Key trades include DTZ Investors’ acquisition of 122128 Buchanan Street for £9.4m (a 4.2% yield) in August, and Spanish property company Pontegadea’s purchase of 7890 Buchanan Street for £31 million (a 4% yield) in September.
Click here to access CoStar’s latest Glasgow retail market report (CoStar login required).
Spotlight on Glasgow – Industrial
Glasgow’s industrial fundamentals continue to strengthen. The market’s vacancy rate has nearly halved over the last five years, aided by positive absorption, limited speculative development and demolitions of older warehouses.
Demand for industrial space from the likes of parcel delivery firm DPD and German discount retailer Lidl (both are expanding at Eurocentral) is being accelerated by changing patterns in consumer behaviour. Glasgow is arguably well-positioned to cater for this due to its links to the M8, which provides direct access to Edinburgh, and the M74, which is the major distribution route connecting Scotland’s central belt to the north of England.
Like elsewhere in the UK, Glasgow’s industrial market has produced consistent rental growth over the past few years and investors have taken note. Recent large industrial investment transactions include Singaporean investor Frasers Property’s £137 million purchase of Hillington Park at the tail end of last year; Canmoor’s purchase of Westway Park for around £40 million in February; and, most recently, UK Commercial Property REIT’s acquisition of M8 industrial estate for £24.6 million in September.
Click here to access CoStar’s latest Glasgow industrial market report (CoStar login required).
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