While take-up of office space in Glasgow city centre reached 177,514 sq ft in H1 2024, a 32% increase on H1 2023 figures, it is likely to remain below the long-term five year average, due to the lack of good quality supply.

At present, Savills notes that there is only circa 600,000 sq ft of prime and Grade A space currently available, of which only 200,000 sq ft is considered prime. This follows Virgin Money removing circa 75,000 sq ft of stock from the market after withdrawing three floors at 177 Bothwell Street.

Looking at Savills data, the average five year take-up for the city currently stands at 490,900 sq ft, suggesting there is less than one year’s worth of supply in the market for the right type of space. What’s more, given the lack of development pipeline, Savills expects rents to exceed £40 per sq ft as the cost of construction continues to impact the viability of both new build and refurbishment projects.

David Cobban, head of Savills Glasgow office and director in the office agency team, comments: “Given the lack of good quality stock, it is becoming increasingly difficult for occupiers to make decisions when it comes to their future office space. If they can’t find what they want they are simply rolling on their leases rather than compromising. It is also important to distinguish between prime and Grade A space, some of which is no longer meeting businesses exacting standards.”

Savills figures also show that 29% of take-up was for Grade A space in H1, on par with 2023 figures. The firm suggests that this number would be far greater if the right type of supply was available, as occupiers remain on their flight to quality seeking out premium workspace that meets both their sustainability and wellness criteria.

Savills recorded 65 deals in the first half of the year, the highest on record for H1. Q2 also saw the highest quarterly take-up since Q4 2022 at 99,516 sq ft. Key deals to date include accountancy firm PwC, advised by Savills, taking 25,887 sq ft in Aurora at 120 Bothwell Street and Boutique Workspace occupying 21,538 sq ft at 9 George Square.

David Cobban adds: “What’s clear is that there is still activity, with up to 200,000 sq ft of deals already under offer or in legals due to complete in 2024. This, coupled with the high level of unfulfilled requirements, means we are likely to see prime supply fall further pushing up rents, which in turn should help to justify further development in the city. Ultimately, businesses will have to be prepared to pay more to get the type of space that fulfils their requirements.”