Landlords could cash in on office scarcity
A lack of quality office space in Scotland’s two largest cities is creating lucrative upgrade opportunities for landlords, research suggests.
Landlords that own “subprime” office space in either Edinburgh or Glasgow city centre could be sitting on a goldmine, according to property consultancy Lambert Smith Hampton (LSH).
By refurbishing their office space to meet the demand, they could increase their rents by as much as 30 per cent, the firm believes. The research found that a dearth of office space development and a high demand in both cities has resulted in an almost complete lack of high-quality grade A space in Edinburgh, and a dwindling supply in Glasgow.
As a result, businesses looking to relocate now have little alternative but to consider lower-grade space or an alternative location.
Aasia Mohammad, head of office advisory for Lambert Smith Hampton in Glasgow, said: “Office space take-up in Scotland is around 40 per cent above the ten-year annual average, having been boosted by the pre-let activity in Glasgow.
“Whilst construction of new office space is under way, most is snapped up immediately which is leaving us with a shortfall.”
The report also identifies that, across Scotland, just under 1,000 office property leases are about to come to an end before the end of 2020. Landlords are starting to take advantage of the situation, LSH noted, with 80 George Street in Edinburgh on track to increase rents by 30 per cent.