The Future of Glasgow's Real Estate

The Future of Glasgow's Real Estate
Reimagining the city centre

2 February 2017, by Savills Research

Mixed-use schemes will deliver future homes and workspace in the city centre, changing how we live, work and socialise


The area known colloquially as the “Golden Z”, comprising the prime retail locations of Sauchiehall Street, Buchanan Street and Argyle Street, has contracted. Occupiers are now primarily focusing on Buchanan Street, along with the blocks near St. Enoch’s and Buchanan Galleries shopping centres, which bookend the street.

Buchanan Street is now fully occupied and is experiencing a surge in rental growth. Demand continues to outstrip supply, so much so that rental levels are now eclipsing Zone A £/sq ft of £300, which reflects a 14% average increase over the past two years.

As a result, we anticipate increased demand for locations just beyond Buchanan Street. Potential reductions in rateable values are likely to further attract retailers and leisure users.

There are a vast number of bars, cafes and restaurants on the periphery of Buchanan Street, offering visitors everything from fast food to fine dining. Merchant City, Royal Exchange Square, Gordon Street and St Vincent Street have established themselves as appealing leisure destinations, attracting local and national interest as this market continues to grow.

Office space

Offices within a five- to ten-minute walk of Glasgow’s two main train stations are in highest demand.

When new developments come forward within this core area they are well received and encourage existing occupiers within the city to relocate and often reconcile multiple offices.

For example, the newly built Grade A 110 Queen Street has attracted ACCA, who relocated from Central Quay, and DWF from Charing Cross. Looking forward, Morgan Stanley will be consolidating their two Glasgow offices into Bothwell Exchange.

However, there is little immediate new Grade A office supply in the city centre. This will have a number of implications.

Firstly, some companies with imminent lease events will agree short term extensions while they wait for new space to be delivered in three to five years’ time. These occupiers will be anticipating the 1.9 million square foot of proposed office developments with planning permission, and could be considering pre let agreements.

Secondly, refurbishments will offer new high quality supply and fill the gap left by the development cycle. This will include the refurbishment of existing buildings to Grade A standard. We anticipate around 600,000 sq ft of office space will come forward through refurbishment over the next two years.

Looking forward, prime sites could be developed on a speculative basis or benefit from pre lets. Some sites will have to reconsider their development mix and the weakest sites and older stock may have to consider alternative uses, such as residential and serviced apartments.

Mixed-use development

Mixed-use developments will be the key driver bringing forward new residential, office and leisure development within the city centre and in doing so will change how we live, work and socialise. Supported by investment and strategies from Glasgow City Council, their development could bring about substantial change in how we utilise the city centre and areas just beyond it.

For schemes with a residential component, proximity to established residential markets is important. Within Glasgow, the Merchant City and West End markets will be the main drivers.

The Merchant City commands a premium due to its residential reputation, central location and proximity to the University of Strathclyde. It is a very small market; in the year to September 2016 there were 145 transactions and the average transaction value was £171,343.

The West End is larger, both in respect of transactions and geography. Due to a comparatively high transaction value, £270,131 in Dowanhill and Hillhead, the West End has, and is continuing to create opportunities on its periphery.

These opportunities have included Finnieston and Park areas, which are now firmly established and are creating opportunities on their peripheries, as they consolidate and improve.


Highest demand for space is within five minutes of the two main stations

Figure 3



Source: Savills Research


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