Conor Osborne, Osborne+Co Director
As many an observer of the city would no doubt agree, Glasgow has undergone a remarkable transformation from post-industrial transience to a blooming global destination – a rich mix of residents and visitors demonstrate an international presence to be proud of.
Whilst much has been achieved, the city now needs an injection of new office space to capitalise on its abundant assets and continue its renaissance.
In supporting 92,000 jobs the country’s real estate industry contributes almost £4.8 billion to the Scottish economy, according to the Scottish Property Federation’s (SPF) latest report. The SPF report also highlights that in 2009, new commercial property construction equated to 7.1 million sq ft but in 2017 the equivalent of only 1.6 million sq ft was constructed. Simply put: office space is not being developed at a rate to support the status quo nor the growth potential.
For the last 18 months, commentators have noted that stagnation of commercial development to be particularly acute. The last new office development was completed over four years ago and since then there has been no new speculative Grade A office scheme.
Meanwhile, pent-up demand for space has continued to strengthen amongst blue chip tenants – it is currently estimated to be around 800,000 sq ft – but, with only 30,000 sq ft of genuine Grade A offices currently available, we face the structural challenge of a growing demand and supply imbalance. This is particularly true within the International Financial Services District (IFSD), the only established sub-market in the city where sites and buildings can support the larger, more institutional floorplates tenants desire.
In this context, the challenge Glasgow must solve is how to fulfil its potential and attract global occupiers – who, importantly, bring highly-skilled and highly-paid jobs – when its current development pipeline is under pressure against a background of market related challenges and geo-political uncertainty.
As it stands today, a significant number of lease-expiries occurring amongst major occupiers in the city over the next 3-5 years will go unsatisfied, resulting in occupiers staying in what may be sub-standard space or looking beyond the city. For Glasgow to flourish, it needs the new fit-for-purpose 21st century office space it so dearly deserves.
Osborne+Co, a consortium of established real estate developers, acquired a 0.79-acre site in the heart of Glasgow’s IFSD at the end of last year. Our plan is to construct one of Glasgow’s largest single-building new offices and pour inward investment totaling £70m into the city.
As Scotland’s largest city, Glasgow is famed for its culture, shopping and, above all, its people – and that’s why we’re here. Its intrinsic values and qualities made it an obvious choice for our Scottish debut.
Aside from its comparatively low occupancy costs, Glasgow has a great deal to offer global business, including its greatest asset: its people and workforce. Highly educated graduates are amongst the most likely in the UK to stay in the city and seek employment upon graduation, eliminating the brain drain seen in other UK regional cities. There are 1.7m people in the Greater Glasgow area, and, when combined with Edinburgh, the region is the second largest jobs market in the UK. Employers moving into the city can do so confident that they can draw from a deep pool of talent in the city.
Moreover, it is a key regional hub for financial services and its status as a leading force in life sciences, demonstrates the city and the regions significant existing strength and variety across sectors. Morgan Stanley’s Glasgow office numbers c.1,400 people working across technology and operations in the Scottish city – a number that puts Glasgow in Europe’s financial services premier league – especially when you consider, JP Morgan, Barclays, Santander and Clydesdale also have large presences here.
And of course, it helps when it comes to attracting and retaining the right people that Buchanan Street offers some of the best retail and leisure provisions outside of London.
Glasgow can compete with the best of them in the UK and Europe to attract the likes of Google, Microsoft, or the multitude of banks looking to north-shore their office portfolios from London; however, it needs a quality office product to do that.
Our new development will deliver a meaningful boost to the local economy, with jobs in construction and local apprenticeships, improvements to the city’s infrastructure – including supporting the Argyle Street ‘Avenues’ project and the surrounding cityscape.
At the heart of the project is the creation of world-class office accommodation for 4,000 employees that is fit to meet the needs and ambitions of modern occupiers to inspire their people, connect a long-neglected site back to the city through an iconic building and support Glasgow in continuing to compete on a global scale.