Scott Wright: What do major office deals tell us about the future of Scotland’s towns and cities?

THE appearance of towns and cities across Scotland has been in the spotlight in recent weeks, with much focus on the causes of the excess rubbish, fly-tipping and vandalism that are blighting some of our streets.

While the reasons for these very visible problems are complex – Covid has presented myriad challenges to councils and their staff, and local authorities cannot be held responsible for every fly-tip that appears – the issue has nonetheless fuelled debate around what needs to be done to revive Scotland’s urban centres from the ravages of the pandemic.

Last week, more evidence emerged of the scale of the challenge, when new figures illustrated a further decline of retail chain stores in the first half of the year. Research from accountancy giant PwC and the Local Data Company found 780 chain stores in Scotland closed their doors for the last time between January and June, while just 344 opened.

The net loss of 436 stores marked a 2.8 per cent decline in store numbers over the period, and represented a quickening of the closure rate compared with the first six months of last year. A net loss of 393 chain outlets was reported for the first six months of 2020, signalling a 2.4% fall in store numbers over that period.

Shopping centres were found to have seen a sharper decline in store numbers in the first half of this year than high streets, with 163 chain store closures and just 23 openings in such locations. But that should not serve to mask the challenges facing high streets, which remain acute. There were 550 closures in Scotland’s high streets over the period, offset by 263 openings.

Retail, of course, has long been in retreat in Scotland, with store numbers in steep decline even before the pandemic hit. But lockdowns brought in to combat the virus, which meant shops were unable to trade for huge chunks of the last 18 months, have greatly exacerbated the problem.

Out of necessity, consumers moved their shopping activities online during lockdown, and in many cases may not return to former habits, piling even more pressure on retailers which sell their wares in physical outlets.

You only need to walk down the likes of Sauchiehall Street in Glasgow to get a very visible sense of the decline. There are now stretches of this famous thoroughfare where it is hard to see anything other than empty units – a truly dispiriting sight for those with vivid memories of the thriving retail scene it once was. It’s hard to imagine new tenants coming in any time soon.

Much of the high street’s decline in the last year-and-a-half has been attributed to the absence of office workers. Without the daily expenditure of people who travel into towns and cities to fulfil their jobs, it has been significantly harder for shops, cafes, bars and restaurants to make ends meet.

However, while the official advice from the Scottish Government is to continue working from home if you can, the end of the office is perhaps not quite nigh.

Three major deals were announced last week that delivered a very strong signal there is life in the office working model yet – offering encouraging news for the many businesses that depend on it for their survival.

On Thursday, the developer of the Grade A Cadworks office block on Glasgow’s Cadogan Street revealed that UK law firm TLT had agreed a 10-year deal to lease the 10,000 square foot ninth floor of the building, which is due to open this autumn. The deal was announced on the same day we learned that the first occupant had been secured for 2 Atlantic Square, another speculative Grade A office development in Glasgow’s international financial services district. Atkins, the engineering and project management consultancy, has leased more than 20,000 sq ft across the fifth and sixth floors of the new building, which has been developed as a joint venture between BAM Properties and Taylor Clark.

Both deals seemingly vindicate the commitment shown by the developers in investing in new high-quality office space in Glasgow amid such challenging times, and also offer hope for those who yearn for something approaching normal life to return to the city again.

And those developers are not alone in showing their commitment to long-term office life in the city centre.

GAP Group, the Glasgow-based plant, tool and equipment hire company, revealed last week that it was relocating its head office to a larger building in the city.

It is moving from its long-established HQ in Carrick House, close to the River Clyde, to Citypoint 2 on Tyndrum Street, overlooking the M8 motorway.

Douglas Anderson, joint managing director of GAP, which has acquired the Citypoint property, said: “We are completely refurbishing this building and are determined to create a state-of-the-art working environment for all current and future employees.”

So, what can we infer from moves like these? What does this trio of deals say about the future of office life in Scotland? Are we now seeing that businesses have the confidence to prepare for life beyond Covid now that the economic recovery is under way?

David Davidson, chairman of property firm Cushman & Wakefield in Scotland, believes the shortcomings of working from home have become apparent in recent months, both from an employee and employer perspective.

And he said the three deals announced last week “follow a pattern we are seeing elsewhere in the country”.

“Many organisations see [a] return to the office as an essential step on the road to recovery from the pandemic,” Mr Davidson told The Herald.

“Initially organisations saw the pandemic as a fast-track to reducing costs and the amount of office space needed. However now we are seeing the floorspace that organisations say they need increasing from 12 months ago as business leaders see the office as an important factor in bringing their teams together, improving productivity and increasing face-to-face interaction with clients and customers.

“We are still in the middle of this journey on the role of office space but businesses with lease expiries or break options on older or outdated offices are looking now at the chance to upgrade and create attractive office environments that their staff will hopefully prefer to home-working.”

Mr Davidson said the climate change agenda was also driving activity in the office market. With businesses keen to demonstrate their commitment to saving energy and reducing emissions, some companies are moving to new offices after finding their current premises cannot be upgraded, he said.

Regardless of what is driving the market, it is encouraging to see businesses prepared to lay down roots in city centres for the long term. It is only through commitment of this kind that our urban centres can find a way to flourish again.

The Herald Scotland

The Herald Scotland

The Herald is a Scottish broadsheet newspaper founded in 1783. The Herald is the longest running national newspaper in the world and is the eighth oldest daily paper in the world. The title was simplified from The Glasgow Herald in 1992