While the coronavirus may be a fundamentally human crisis, it has also taken its toll on the health of national and regional economies.
With this in mind, it should come as no surprise that the demand for commercial office space stalled in Scotland’s biggest cities during Q3, with the market delivering mixed results as a result.
Interestingly, both Edinburgh and Glasgow have reported positive growth in this sector during 2020, with the former seeing demand rise to its highest level since Q2 2018 following the completion of its largest ever pre-let deal at Baillie Gifford’s new HQ at Haymarket.
In this post, we’ll explore the Glasgow market in a little more detail, while asking what opportunities the city holds for aspiring firms north and south of the border.
Growth and Competition – A Snapshot of the Glasgow Marketplace
There’s no doubt that the market for office space in Glasgow has grown exponentially in recent years, with demand spiralling to brand new highs as a direct result of this.
The growing popularity of Glasgow amongst entrepreneurs was borne out by a study in 2018, which found that it was one of the top 15 locations in the UK for startup ventures and small business growth.
At the heart of this is a booming technology sector in Glasgow, which began to peak in the middle of 2019. At this time, the city ranked second in CBRE’s coveted 2019 ‘Tech Cities’ report, which evaluates the best UK locations for emerging tech businesses across a range of growth niches.
In this respect, Glasgow has become a hub for digital transformation, which is consuming a growing number of industries and emerging as one of the most seminal trends in the contemporary economy.
Arguably, the pace of this trend is likely to become accelerated in the wake of the coronavirus, as businesses continue to adapt their methodologies and strive to strike the ideal balance between optimising remote working and operating high-end office space.
What About Price Points?
Clearly, recent events have combined to create something of a perfect storm in the Glasgow marketplace, with the city now boasting one of the most competitive entities of its type in the UK.
However, the last two years have seen the supply of Grade A office spaces dwindle in Glasgow (although this trend has been partially halted following the spread of Covid-19).
Consequently, the vacancy rate for spaces in Glasgow city centre has reached an all-time low of 9.9%, and this has forced prices incrementally higher in recent times.
With the development of office spaces also relatively slow, this trend is unlikely to change before the end of 2020, creating a scenario where smaller and less established businesses may ultimately struggle to afford relocating to the area in the future.
The good news is that this could be poised to change in the near-term, with new developments having been planned for the next 18 months or so (coronavirus permitting, of course).
This could restore some much-needed balance between supply and demand in the region, helping to boost the appeal of Glasgow’s property market further while opening up the sector to a wide range of firms.