CBRE: Scottish office market picks up in 2010

 

Take-up in the Scottish office market increased in the first half of 2010 as small deals fuelled the market, according to CB Richard Ellis.

 

In the agent’s latest Scottish Offices Market View, it said that take-up in Glasgow more than doubled to 301,800 sq ft in the first half of 2010 compared to the same period in 2009. 

 

Audrey Dobson, senior director of business space in Glasgow, said: “Take up during the first six months was polarised with significant activity at the smaller end of the market fuelled by new start ups.

 

“Occupier demand was also healthy at the larger end, particularly amongst the professional sector with companies keen to take advantage of the attractive lease packages currently on offer.

 

“Developers with the financial resources to undertake speculative development will do well as they can supply much needed stock in a very tight market.”

 

Edinburgh and Aberdeen also experienced an “impressive increase” as demand showed signs of strengthening, according to CBRE.

 

In Glasgow and Edinburgh prime rents remained unchanged at £27 per sq ft and £27.50 per sq ft respectively. 

 

After dipping by £2 to £28 per sq ft in 2009, the prime rent for Aberdeen has increased to £30 per sq ft.  This is as a result of strong lettings activity and the letting of a building in a prime office area in Q2. 

Supply decreased across Glasgow, Edinburgh and Aberdeen this year compared with H1 in 2009. 

This is set to continue with few new developments in the pipeline; however this undersupply may encourage developers to go into construction in the near future.

Stewart Taylor, business space director in Edinburgh, said:  “The current phase of slack water, which the market is in, will prevail for much of 2010 but this in itself is an indicator of changing conditions.

“The most encouraging characteristic of the year to date has been the reappearance of some larger requirements which were almost completely absent throughout 2009.  This coupled with stabilisation within the financial sector and retreating fears over accommodation release should serve to contribute to the changing tide.”

 

Mark McQueen, senior surveyor, agency in Aberdeen said: “There continues to be optimism within the office market in the city with take-up in 2010 likely to outperform 2009 figures.  Rents remain stable with minimal rent free periods being conceded in comparison to other major cities.  Companies continue to trade well in the city and continue to expand despite the national economic forecast.”

 

Gavin Willins, director of capital markets: “We are now 36 months on from the end of the peak, or start of what became the rather alarming crash.  The world, and our market, is now a very different place and it has been a painful experience for most of us.  The hard times are by no means over and it is a case of keeping the sleeves rolled up and working the market and assets to deliver value.

“The relatively sharp bounce back in some values from Q4 2009 has started to plateau in Q3 2010, which is in line with forecasts as those active investors take stock during this period. Transactional volumes in the investment market remain relatively low, however, the fundamentals associated with prime product has ensured good demand for properties that do become available – at the right price!”

bridget.oconnell@estatesgazette.co.uk

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