RENTS for prime office space in Glasgow are on a par with Edinburgh for the first time in 15 years, a new report on the global office market has revealed.
Cushman & Wakefield's annual barometer "Office Space Around the World" - which covers 211 major locations in 51 countries - showed that Edinburgh, with an annual rent increase of just 0.1 per cent, was the bottom of the league in terms of rent rise i
n key UK city office locations.
While London's West End topped the table with rents of around £1076 per square metre each year - up around a quarter on the previous year, Edinburgh commanded only around £291 on comparable terms. However, rents in Glasgow soared by 17.5 per cent over the past year, hitting the same figure seen in Edinburgh for the first time in around 15 years.
Commercial property experts said Glasgow's rise was down to a number of factors, including the growth of its financial services district. But they also pointed to a more readily available pool of labour and more affordable housing as reasons why companies may choose the west coast over the Capital.
However, demand at places like the Aurora building and Broomielaw has drained the supply in Glasgow, whereas Edinburgh still has floorspace in venues such as 40 Princes Street, Waverley Gate and the under-construction Quartermile district.
The commercial property market in Edinburgh has come off the boil in recent years, down from rents of around £29 per square foot in 2000 to current levels of £27.50p and take up last year only about half average levels.
"We've been at the current level in Edinburgh for around two years now," said Chris Cuthbert, C&W's Edinburgh-based partner and head of office agency for Scotland. "But I'm pretty confident that we'd achieve slightly better than that just now."
"Glasgow could be a short-term thing, similar to what happened here a few years ago when the supply was thin."
London was the most expensive city in the world for office rents, the report revealed, followed by Tokyo and Hong Kong. Dublin stormed to sixth, from 12th last year, commanding rents of up to £433 per sq m, after its financial services workforce doubled in the last ten years.
In the UK, Belfast clocked up a 20.8 per cent gain to £156 per sq m, while Birmingham rose by 9.1 per cent to £323 and Manchester improved 3.7 per cent to £307.
But Mr Cuthbert said that these rental levels south of the Border could help Scotland, and Edinburgh in particular.
"If you look at Edinburgh in isolation, it makes it good value and affordable in a UK context," said Mr Cuthbert.
"That could bring more functions up north from a cost point of view and we're seeing some renewed interest in service requirements at places like Waverley Gate where indigenous interest is building."
And he added: "If you're glass-balling, Edinburgh's current supply stock is good value and new build now would mean rents in excess of £30 per sq ft would need to be achieved."
