Group puts its stamp on city skyline
AWEEK in politics, it’s often ruefully noted, is a long time – but ten years in the property marketplace has for gone by remarkably swiftly and productively for many in the sector. When the core was slipped last month at HFD Property Group’s 177 Bothwell Street in Glasgow, set to be the city’s largest single office building – it marked a decade since the completion of G1, George Square, the £70 million re-development of the former General Post Office in Glasgow.
It set a new benchmark for premium office development in the city and recent years have been busy ones for the group, which has delivered more than 2.8 million square feet of commercial property across its office-led portfolio.
“The completion of G1 was certainly a major highlight. It looks as fresh today as when we finished it and with the exception of Jamie’s Italian on the ground floor it’s still the same the same line-up of tenants,” says Stephen Lewis, managing director of HFD Property Group.
Headline rents were set for Glasgow at the building in 2009 at £29.50 per sq ft for pre-lets and Lewis says that figure remained until some more recent deals. He says the figure has increased to £32.50 and will continue to move upward in early 2020, given the supply and demand situation in Glasgow.
“I think headline rent levels will increase to £34 in 2020 for new developments and will stabilise at around that level for a while. Refurbished space will continue to be let at £30 plus – £31 or £31.50 – about the right differential between new build and refurb,” he says.
He highlights several reasons, including the fact that specifications for buildings have become ever more demanding, given the climate change focus and the need to accelerate the drive toward sustainability. There is also the growing employee ‘wellness’ agenda with certification processes and its associated costs while construction costs have increased.
“All of these elements drive up the cost of new build buildings which in turn drives up the cost of rental levels,” says Lewis.
HFD, he adds, has created its own construction division, moving the group from being a management contractor to becoming a main contractor in its own right. “For us, that has represented the single largest change in the past 12-24 months, with a substantial expansion of the team but it gives us a much greater degree of control.”
Another milestone in the past decade was Ecocampus, one of HFD’S largest projects at 235,000 sq ft at Hamilton International Park, described as the UK’S first speculative carbon-neutral office development while in Aberdeen the group also concluded Wood Group’s new head office at City Park One consolidating several offices into a new, larger unit with 54,000 sq ft floorplates allowing Wood to get full teams on single floors and achieve important efficiencies, including in energy.
Enhanced energy efficiency is clearly on
TOWERING EXPECTATION: It is hoped HFD’S 77 Bothwell Street project, left, will emulate the huge success of the £70 million ‘G1’ re-development of the former General Post Office, above.
Lewis’s mind; he says that while connectivity, sustainability and wellness have recently been key drivers in the sector, sustainability is currently the most important.
“There is a major focus on that area and with Glasgow hosting the UN’S climate change conference COP 26 next year there’s an increased urgency among occupiers about what they are doing about as individuals and corporate entities in addressing this.
“We’re now at the point where people will not invest in buildings that don’t exceed the current sustainability targets.”
Bothwell Exchange, the new jewel in the HFD crown is taking sustainability and connectivity (it is the first development in Scotland to receive a Platinum Wiredscore certification) to new levels. Its first phase at 122 Waterloo Street was pre-let to Morgan Stanley and 177 Bothwell Street will house CSYB, rebranded Virgin Money.
Lewis expects the next ten years to be as positive as the previous ten and says that is best illustrated by HFD’S acquisition of 100 Bothwell Street, which will become available in December 2013: “That will either be a refurbishment or a redevelopment and while there’s something of a time horizon we realised it was opportunity to acquire one of the best sites and buildings in Glasgow’s city centre,” he says.