SCOTLAND’S commercial property sector rode a financial services wave after Barclays’ Glasgow acquisition but while the “mood music is very positive, ultimately there is a dark cloud above our heads in the form of Brexit”.
Experts at the heart of the sector report a “spectacular” success this year with banking at its centre, as new tech standards officially reflect greater high-end expectations for fit-outs that consider elements including wellbeing and include requirements such as break-out spaces at ground level.
Two leaders in the commercial property field who are also members of the British Council for Offices, the sector membership organisation which researches and develops best practice, said wellbeing is an increasingly important element in an accommodation package.
Clydesdale closed 110,000 sq ft at 177 Bothwell Street in Glasgow and fund manager Baillie Gifford signed a deal with Chris Stewart Group to pre-let 60,000 sq ft in the Mint Building in Edinburgh.
Barclays’ deal with Drum Property Group for a 470,000 sq ft campus at Buchanan Wharf in Glasgow carries extra weight as an anchor as it is an acquisition.
Stephen Lewis, managing director of Bellshill-based HFD Property, said the move “is not just a fantastic result for Glasgow but also the Scottish property market and in the face of continuing Brexit negativity it is very comforting to see a multi-national corporate invest significantly in the city and continue that long-term investment”.
“This is not just them committing to lease for 10-15 years, this is an acquisition by them to own their building and invest not just in the wider standard banking sector but with big focus on tech.”
He added: “There is still a need to create more space.”
He pointed to M&G’s Grid Building and the Cadworks in Cadogan Street in Glasgow to also help provide “some other much-needed high quality grade A space”.
Mr Lewis said: “In terms of highlights there’s certainly a continuing focus on occupiers.
“Staff wellbeing has moved significantly up the agenda now.”
Mr Lewis, whose development’s include 177 Bothwell Street, said that more broadly the mood music is “very positive but ultimately there is a dark cloud above our heads in the form of Brexit”.
He said: “At the very best it will cause occupiers to pause until they understand the outcome of what that end decision is, and worst case is some occupiers may review their requirements and either reduce space or look at other cities to invest in and grow their business as opposed to within the UK.
“We really need to find out where we are with Brexit.”
He said: “For us as a business at HFD we are continuing o develop.
“We secured another site at 100 Bothwell Street and will continue to secure more sites.
“It would be good to see some of the city deal money begin to be delivered.”
HFD finished its first development in Aberdeen in 2016 – the 220,000 sq ft headquarters for Wood.
Mr Lewis said: “We know Aberdeen relatively well and we are building another site there.
“The market is still recovering from the oil price crash and a fundamental change in that market, but it is better and continues to improve.”
Angela Lowe, Edinburgh-based senior director at CBRE, above, said that focusing on a Scottish capital context it has been “another strong year in the market”.
She said: “It has been positive, with some big deals, like Baillie Gifford at the Mint Building, Capital Square getting Brodies and Pinsent Mason, so they are pretty significant lettings in the market to come through.”
Baillie Gifford is taking space capable of accommodating 700 staff in the building, part of the £85m regeneration project at The Registers in St Andrew Square.
Ms Lowe said: “The grade A city centre market has done really well.
“As a result of that people are looking at office refurbishments in a different way in Edinburgh.
“In a lot of the office buildings now there are opportunities to do proper refurbishments on them to create a grade A product that goes head to head with new build space.
“We have seen some good buildings coming through this year and the bar being raised in terms of the quality the product being offered, the quality of the common parts, the cycle facilities.
“The market expects a lot more from an office now than just put a reception desk and not much else.
“They are looking for more of that user experience.”
She added: “Certainly we are seeing a quality shift in the offering to meet what occupiers are looking for.
“Everybody wants break-out spaces at ground floor, not just a sterile reception, they want a collaboration space and more of a concierge style of management in a building.
“There is supply, there are offices available and new offices coming through the pipeline.”
Source: Herald Scotland