LISTEN: Glasgow’s economic growth exceeded that of the UK as a whole over the past five years, according to Savills.
The advisory firm says that mixed-use schemes will be the key to boosting the supply of office, retail and leisure space in the city.
Bruce Patrick, head of commercial and mixed-use development across Scotland at Savills, said: “Glasgow benefited from the Commonwealth Games, not just in terms of an improved public image and a new sense of confidence, but also in the form of considerable public investment in the city. This is set to continue under the City Region deal, which in turn is attracting private sector investment.
“There has been a surge in activity across almost every aspect of the city’s real estate, whether we are talking about infrastructure investment, housing demand or commercial and industrial activity.
“In the pipeline are a number of strategic sites where developers and funders are seeing the benefit of combining multiple uses and cash flows in order to get projects out of the ground.”
Savills’ report, The Future of Glasgow’s Real Estate, revealed that:
• Glasgow has enjoyed 9.9% GVA economic growth over the past five years. This exceeds the Scottish average of 8.4% and is set to achieve 7.2% over the next five years;
• the tourism industry is set to grow to £771m by 2023, bringing an additional 6,600 jobs;
• latest figures reveal that while 4,749 new homes were completed in the six months to June 2016, this represents a 22% shortfall, as identified by the Clydeplan Housing Needs Demand Assessment;
• Glasgow’s residential market is growing, and now accounts for 20% of all households in the city. During the same period rents increased by 16% and by a further 7.2% last year;
• Glasgow’s technology, media and telecoms sector experienced 11.5% employment growth over the past five years and this upward trend is expected to continue, supported by investment as part of the City Deal;
• despite a shortage of new grade-A buildings and 50,000 sq ft of accommodation currently under offer, no new schemes are capable of being delivered for occupation before 2020. This may play into the hands of owners who have refurbishment projects on existing office buildings;
• Buchanan Street in Glasgow’s Golden Z retail enclave is now fully occupied and there has been a surge in rental growth with a 14% increase over the past two years; rents are now eclipsing £300 per sq ft. Demand has outstripped supply and a renewed occupier focus on Argyle Street and Sauchiehall Street, closest to Buchanan Street, is anticipated, supported by reductions in rateable values.
The report identified four sites with the potential to become vibrant mixed-use hotspots: Partick & Partick Hill, Charing Cross, North George Square/Merchant City and Merchant City.