Glasgow 2017 commercial property predictions

Glasgow can truly boast of being a city capable of competing on the world stage. Knight Frank’s Glasgow commercial property experts identify the stand out barriers as well as drivers that will shape Glasgow’s 2017 commercial property landscape. 

Lack of A grade stock 

Whilst there is undoubtedly caution in the market in the aftermath of the Brexit result there continues to be strong interest for Glasgow offices both in investment and occupational markets.

The lack of Grade A stock combined with the absence of new development will see us witness rental growth within the Grade B+ markets with rents moving towards the mid to high £20s and incentives reducing. 

The potential for a handful of best in class Grade A buildings to trade over the next 12 months will be a litmus test for the Glasgow market and there is the potential for yields achieved in line with other major UK cities.

Refurbishing current Grade A stock

There is now only a limited amount of new Grade A stock available in the city and new stock is at least 24 months away from entering the market subject to funding being secured. 

This is a great opportunity for owners / buyers of current stock to refurbish to a Grade A standard to capture occupiers in this tier. 

There are some standout examples coming through the design / construction stage at the moment that will no doubt win out if the owners have the confidence to spend fully to create the right environment. 

Foreign investment 

Glasgow has a history of attracting foreign investors owing to the robust fundamentals of the Glasgow office market. 

The city is seeing continued interest from overseas funds and private investors, who are targeting large lot sizes over a range of asset types ranging from “Trophy” to “Core-plus” and “Value add”. 

Further, these investors are seeking to capitalise on the post-Brexit market which offers a favourable exchange rate combined with income yields that are exceptionally attractive in comparison to Gilt yields which are at a record low level across the board.

Leveraging existing stock

The lack of office stock especially in Grade A or upper size bracket (50,000 sq ft plus) will mean that occupiers will not have a readymade choice of Grade A office stock to consider. 

There is a genuine need for occupiers to consider their occupational strategy at an earlier stage as they may have to commit to refurbishments underway or even pre-letting which to date has been very limited in Glasgow with the exception of the very largest occupiers.

Knight Frank Glasgow matches commercial property investors and occupiers to the properties that are right for them. Contact our Glasgow commercial property experts to find out how we can help you.