In Glasgow, for instance, there’s currently more than 750,000 sq ft of latent occupier demand from businesses still looking for office accommodation across the city. The huge problem is, however, the availability of good quality stock that meets the modern needs of business operators.

Currently, there’s less than one year’s supply of premium office space on the market. Instead, there’s a glut of sub-standard buildings that are largely no longer fit for purpose and, in many cases, standing vacant with little chance of letting in their current state.

What do occupiers want?

This has been compounded by the ‘flight to quality’ from occupiers. According to a recent survey of HR professionals, undertaken by Savills, almost three quarters of respondents agree that real estate is a very important tool when it comes to attracting and retaining talent and that a city centre office location is optimal. This, alongside the fact that ESG and staff wellbeing are now non-negotiable, means that much of what’s available no longer cuts it.

Herein lies the opportunity. Glasgow remains an attractive location for people to both live and work. With the highest graduate retention rate in Scotland according to the Higher Education Statistics Agency, and third out of the Big Six cities, we need to make sure that we are delivering the right real estate to remain relevant.

What’s the solution?

There remain a number of challenges, and there’s a need to be less prescriptive in our thinking when it comes to solving the problem.

With an almost non-existent development pipeline, we cannot rely on new build stock. The enormous cost of construction continues to impact viability and as a result we expect rents to continue to rise for best in class space. This will, no doubt, require a change in mind shift for occupiers who are looking for value. In this market, however, the truth is: you get what you pay for.

Thinking outside the box

Without more creative thinking it will remain increasingly difficult for occupiers to make decisions when it comes to their future office requirements. If they can’t find what they’re looking for they will simply roll on their leases, inhibiting growth. Or worse take their expanding businesses out of our city altogether and move elsewhere. What’s clear is that it will definitely not attract new entrants to the market.

One possible solution is the repurposing of redundant buildings. We have already seen some examples of office to residential conversion, such as Station House in St Enoch’s Square, Glasgow, which works twofold. One to take poor office stock out of the market and two, to provide much needed housing, whether that be for private sales, build-to-rent or student accommodation. While this isn’t a one size fits all fix, it will require planners, councils and all those involved to think outside the box.

For the buildings that are not suitable for conversion, refurbishment projects must be considered. There are now a myriad of cost effective solutions that can create both sustainable and attractive workspace. Doing nothing, however, is simply not an option.

According to Oxford Economics, Glasgow’s GVA is forecast to grow by as much as 15% in the next five years, just 3% less than London. However, this will no doubt be contingent on our willingness as a city to continue to innovate and evolve.

As always, collaboration is key and while we are starting to see some action, more is required to make sure Glasgow doesn’t fall out of favour.

Further information

Contact David Cobban

Scottish Property Outlook – Glasgow 2024