Glasgow office market roundup
Q1 2022 take-up, totalling 82,000 sq ft across 26 completed lettings, was 2% below the Q4 2021 total, but 34% above the figure achieved in Q1 2021. Q1 2022 take-up was, however, 42% below the five-year Q1 average for the market.
Grade A take-up of 23,000 sq ft accounted for 28% of total take-up in Q1 2022. Between 2017 and 2021, the average proportion of Grade A take-up in Q1 was slightly higher at 37%. However, this lower level of Grade A take-up can be attributed to a lack of suitable Grade A supply rather than a lack of demand within the market.
Total supply fell by 1% in Q1 2022 to a total of 1.47 million sq ft. Furthermore, Grade A supply decreased by 9% to a total of 694,000 sq ft at quarter end.
This occurred in part due to the transactions to BDO and Burness Paull at 2 Atlantic Square, which reduced Grade A supply by a total of 22,000 sq ft. With no new developments in the pipeline over the next two years and with a continuation of the ‘flight to quality’ within the market, Savills predicts that the Grade A supply total will continue to fall throughout 2022.
Take-up by business sector
The Professional sector was the most active sector in Q1 2022, accounting for 45% of overall take-up. This was made up of seven deals at an average of 5,316 sq ft per deal.
Although the Public Services, Education & Health sector was the most active sector in 2021, it did not record any take-up in Q1 2022. That being said, with 350,000 sq ft of active requirements in the sector at present, Savills expects Public Services, Education & Health take-up to increase in the remaining quarters of 2022.
Prime rent remained stagnant at £35.25 per square foot in Q1 2022. That being said, this comes off the back of 8% growth in 2021 alone and 15% growth since 2015. Equally, average Grade A rents have increased significantly over the past six years. The average Grade A rent in Q1 2022 was £30.00 per square foot, which represents a 7% increase on the 2020 average.
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