The current financial crisis is thought to have caused the office sector to suffer the most out of the main areas of letting properties. However, the recent Scottish Property Review showed that sales and lettings had not changed much over the years and that they are currently running at a substantial percentage of the long-term average.
According to Dr Mark Robertson, the author of the report, “Office sales and rental of serviced offices are no worse than they were during the last recession in 1993 despite the emphasis on banking and financial services this time round.”
Although public sector demands formed the basis of the Glasgow market, substantial deals in the private sector were achieved. The vacancy rate in the city is 17 percent, falling to 12 percent in the centre of the city.
Edinburgh has seen a number of large lettings, with NHS Lothian taking 40,000 square feet and Wood Mackenzie at Exchange House taking 38,000 square feet in Semple Street. Shawfair Business Park was the biggest Edinburgh letting, with the Scottish Qualifications Authority taking around 55,000 square feet.
The Edinburgh market is being kept steady by the use of smaller floor plates. Speaking about the competitive response from landlords, Robertson said "Town houses' leases signed in the 1970's have started to expire and landlords have responded by offering competitive packages."
If the office rental sector increases, then retail could win or lose out. Robertson commented on once busy market towns, saying that they were badly affected “over the long term by a move to city centres, regional shopping centres and superstores.” Amongst towns that were badly affected were Paisley and Kilmarnock.
Market towns could continue to be badly affected, with Robertson stating “In some cases the problem will be short-term and a return to economic growth will eventually deliver better times. But in other high streets there is now a pressing need for landlords to seek to diversify.”
Market towns such as Dunfermline, Perth, Stirling and other towns that are located further from higher populated areas seem to be performing better than market towns that are competing with areas such as Glasgow, Silverburn and Braehead.
The area that was shown to be continuing to perform well with rental growth and fully occupied was Buchanan Street, which is located in central Glasgow.