The Capella development has 11 storeys and 116,978 sq ft of space, it is grade A office space with large floor-plates of 11,000 sq ft. Only two other developments have this level of excellent grade A office space in Glasgow, the G1 on George Square and the Copenhagen Building of Hope Street.
Once those developments are fully leased, there are no more Grade A office space developments in Glasgow until next year at the earliest. Potential tenants have a tiny window of opportunity to snap up a bargain in grade A space, prices are currently averaging £26 per square foot.
Once the window closes further, office rents won’t be so cheap. Andy Cunningham of Cushman & Wakefield also reports that two major investors from London are eyeing up space in Glasgow, meaning the window of opportunity may be closing sooner than expected. They have been attracted by the high demand for space, and are looking to buy prime space to let out when rents increase during the high demand period in the future.
A report from Cushman & Wakefield says “the worst is anticipated to have passed and 2010 is more likely to be a period of stabilisation rather than growth.”
As the market stabilises in Glasgow and the rest of the UK, we may see a similar pattern in other cities. Prime office space will be seen as a formidable investment opportunity meaning fierce competition both from investors looking to buy and tenants looking to rent.