By George, retailers see it as streets ahead

IN THE struggling commercial property sector, incentives are the name of the game.

That means landlords are forced to cough up to persuade occupiers to move in – that can be offering a rent-free period or footing the bill for a shop or office fit-out.

CB Richard Ellis reports that incentives are becoming more favourable in Glasgow as landlords seek to secure tenants.

Even in Princes Street, Edinburgh, incentives are being handed out and they can be anything upwards of six months rent-free.

George Street in Edinburgh, however, is bucking the trend. The handing out of money is the other way round – retailers are paying premiums to that they can get space in the street.

The mid- to upmarket retailers who reckon that Princes Street is too mainstream for them are queuing up to get into George Street.

James Godfrey, of Culverwell, has acted for many of the up-market retailers in their search for George Street premises.

He says: "Rents in George Street have rocketed. Retailers have to pay positive premiums if they want to get into George Street which is unusual in the current market."

There are no vacancies in the street and any that come to the market will be snapped up – and paid for. Twelve to 18 months ago, rents in George Street were around £125 per sq ft; a year ago they had soared to £140 and the highest at the moment is £170. In Princes Street it is between £130 and £215, depending on the pitch, with the east end of the street enjoying a popularity which is expected to grow on the back of developments in St Andrew Square.

The premium that has agents talking has been paid by Church Shoes so that it can move into George Street – £151,000 just for the privilege of signing a lease.

Godfrey points to strong demand from upmarket luxury retailers such as Ted Baker, Tiffany, Reis Accessories and Brora Cashmere, with Church Shoes, Jack Wills, Cath Kidston, Hardy Amies and Brooks Brothers opting for Edinburgh instead of Glasgow. With no current vacancies in George Street and considerable demand from retailers, Godfrey points to the fact that, in the street, there is still a considerable amount of "dead frontage". He continues: "George Street historically was not retail. It was dominated by banks and building societies and there are buildings which could be used to create more retail space and really make George Street the dominant retail pitch in Edinburgh. But going through the process would be lengthy, costly and time-consuming and that puts landlords off trying."

In another part of Edinburgh, there is a burgeoning office location, with the latest move being by First New Zealand, a financial services organisation, (CBRE acting), which has taken has taken the 3,700sq ft second floor at Centrum House, in Dundas Street at £15.50 a sq ft.

Centrum House is a recent refurbishment by Highcross, and Peter Fleming of Montagu Evans, letting agent for Highcross (jointly with Savills), said: "The refurbished Centrum House is the latest stage in the establishment of this northern part of the city centre – just half a mile from the George St/Hanover St junction – as a defined office area.

"It is significant that, in taking space at Centrum House, FNZ will be remaining in the area, expanding from its base in Silvermills.

"Other occupiers in the vicinity include RBS, Standard Life, Royal London and Buccleuch Properties and with the completion of the 190,000sq ft Tanfield development next year, by Carlyle Group and Bellhouse Joseph, will further strengthen its profile as an office location."

TENANT FINALLY FOUND AFTER FIVE-YEAR HIATUS

A 36,200SQ FT manufacturing and production unit that was bespoke-built for Motorola at Starlaw Park in Livingston and has been empty for five years has found a tenant in a deal put together by King Sturge. Motorola never occupied the building, Alcatel Lucent Telecom took a lease on it but also never occupied it, and now biomedical company Hyaltech has agreed a ten-year lease at an annual rental of £199,100 (£5.50 per sq ft). The site and building are now undergoing upgrading and alteration to suit Hyaltech and should be operational within the first quarter of 2009. Hyaltech was self-represented and Jones Lang LaSalle advised.

IN ONE of the biggest property deals in Glasgow this year, Daejan Holdings has secured a pre-let of the 34,000sq ft office at 2 Cadogan Square to outsourced contact centre services specialist beCogent at a rental of £16.50 per sq ft on a ten-year lease. BeCogent was represented by Knight Frank, with Ryden for Daejan, which is to refurbish 22,000sq ft of offices at 1 Cadogan Square, providing suites from about 5,000sq ft plus up to 22 car spaces.

THE Edinburgh-based EG Thomson Group has taken 3,750sq ft of office space at 108 Princes Street in Edinburgh, moving from Bonnington Bond at Leith. The accommodation has been taken on a 15-year sub-lease at an initial annual rental of £70,000. Montagu Evans acted for EG Thomson and Culverwell for Next, the head tenant.

THE Norwegian timber windows company Janex has taken a 1,400sq ft ground-floor suite at Callendar Business Park, Falkirk, at £14.75 per sq ft. DM Hall and Cushman Wakefield acted for landlord Windsor Life Assurance Co.

ON BEHALF of Miller Developments, Knight Frank has let the first-floor office suite at 116 West Regent Street, Glasgow, to 1 Call Direct, an existing tenant which already occupies 6,000sq ft in the building and has taken the additional 3,669sq ft on a five-year lease at £16.50 per sq ft.

GLASGOW-BASED Scot Sheridan has secured for an undisclosed rental the letting of a 5,000sq ft light industrial unit at its New Houstoun Business Park in Livingston, where a second 5,000sq ft unit is also under offer. Peffer Paints, which has two Edinburgh showrooms, will base its third Scottish outlet at the West Lothian site.

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