Glasgow's Esso House is motoring into a new future. The office building at 55 Blythswood Street has been acquired in a #2.8m deal by a joint venture company comprising M J Gleeson Group Plc and Scottish Capital Group.
The new owners have gained planning consent for a major redevelopment and extension of the building. When complete, the upgraded property will offer some 66,000 sq ft of air-conditioned office space.
''Flexible floorplates of around 9500 sq ft make the scheme suitable for single or multiple tenants, or for call centre occupiers,'' says Keith Aitken of agents CB Hillier Parker who advised sellers Raglan Estates.
The reconstruction will be handled by M J Gleeson and is scheduled for completion in the middle of next year. The scheme will also contain 7000 sq ft of retail or leisure space fronting Waterloo Street on the ground floor.
The redevelopment has been designed by Glasgow-based architects Glass Murray. Surveyors James Barr represented the purchasers.
When it comes to letting the building, the developers will probably have to accept a shorter lease length than they would like. According to the latest research from Investment Property Databank (IPD), property developers and investors in every sector
are having to accept much shorter lease lengths than were attainable a decade ago when the ideal lease (from the landlord's point of view) tied the tenant in for 25 years. Golden days, but now just a fading memory as lease lengths plummet across the board.
During the 1990 property boom, average UK office lease lengths stood at 21 years, but these have contracted sharply to a current average of just 15 years.
Hardest hit have been offices built in the 1980s. A decade ago these could command average lease lengths of 23 years, but now have to be satisfied with fewer than 10 years.
Best performers are the newest buildings. Current average lease lengths for modern stock stands at 15 years. However, modern buildoings are the most likely to be let with a break option. More than a third of new lettings offer tenants the option to break the lease at some point. Interestingly, only 23% of older buildings offer such a break.
While lease lengths have been shrivelling, so has the traditional incentive of a rent-free period. Only one-third of the rent-free periods granted in the last financial year were for more than four months. Prior to 1997, more than 70% of office lease deals came with the incentive of more than four months rent-free.
Industrial leases are holding their own at an average of around 15 years, virtually unchanged since the early 1990s but much reduced from their 1980s heyday of 18 to 23-year leases.
Although retail properties have been the top rental performers, lease lengths have been dropping steadily throughout the 1990s. While 23 years was an average lease length on retail deals in 1990, by 1998 the average was 17 years.
But there is a clear division between high street and out-of-town retail.
Lease lengths in high street units and in shopping centres have dwindled, but retail warehouse parks have seen a steady average of just over 24 years.
Across all property sectors,
the five-yearly rent review has remained ''sacrosanct'', according to IPD who researched 75,000 UK tenancies in buildings worth some #70bn to produce their results.
St
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