By Scott Wright
IT cannot have been comfortable for commercial property developers in recent months to routinely see headlines declaring the end of office life is nigh.
However, despite the country being once more in lockdown and working from home being firmly back on the agenda, Basil Demeroutis is showing no signs of panic.
In fact, the founder and managing partner of FORE Partnership, the firm behind the 96,000 square foot office Cadworks building under development in Cadogan Street, Glasgow, has never been more convinced about not just the appeal of the project, but the city as well.
Following a brief hiatus after national lockdown was enforced last spring, construction work is now motoring along at Cadworks, two weeks ahead of schedule, with the building due for completion by the end of October. The construction is being carried out by Bowmer + Kirkland, which was appointed to the £30 million project in August 2019.
“B&K (Bowmore + Kirkland) has done a phenomenal job,” Mr Demeroutis said. “They have just cracked on with it and done as best as they can in the circumstances.”
The Cadworks site was originally acquired by FORE in 2016, shortly before the referendum on EU membership that led to Brexit, and is one of only a handful of speculative office developments taking place in the city. Environmental sustainability and tenant wellbeing have been placed firmly at the heart of the plans, which will include a cycle-in ramp, believed to be the first of its kind in Scotland. It has also been designed to offer a range of flexible spaces.
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Asked if any of the plans had been reconfigured in light of coronavirus, Mr Demeroutis said: “The good news is we have been thinking about the future of work since we started this eight years ago. In many ways, the design for Cadworks had already taken on board many of the ideas and concepts that are now front page news for everyone in the property industry.
“Things like break-out spaces and strategies around health and wellbeing, fitness, air quality… we had already baked into the design of the building. In reality, we changed very, very little.
“We had already gotten rid of the car parking and put in place the state-of-the-art cycling facilities, with lots of different options for different types of cycling.”
The marketing campaign for potential tenants has been running since before the pandemic took hold. In spite of predictions in some quarters that office life will change for good in the wake of the crisis, Mr Demeroutis said he has been “pleasantly surprised” at the appetite for space.
“There’s some well-known requirements out there in the market, and there isn’t that much suitable space for people that do need to take it,” he said. “We have been making proposals, putting terms out and showing people the building. That’s all been happening. Clearly, that’s been at a much slower pace than we would see in a normal market. There is no sugar-coating that at all. But to say activity has stopped would not be accurate.”
Asked if any tenants had been secured, Mr Demeroutis replied: “Not yet. We’re close to the first deals. It has taken a little bit of time to get some of them across the line because of the challenges of Covid, but I think we’re pretty close to getting the first one done.”
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Mr Demeroutis noted that larger businesses were currently in more decisive mode when assessing their office needs than small firms, such as those that need space for around 50 to 100 people, which are less clear about their future needs. “I think larger occupiers understand they need at least a base minimum amount of space,” he said. “So, whereas they may have taken 30,000 or 40,000 square feet before, maybe they will just take
15 or 20 [thousand]with a bit more flexibility on the rest. We are still talking to people like that about at least minimum amounts of space that they see as really never going away.”
He added: “The good thing as well about the Glasgow market, and other cities that we are active in, be it Manchester, London or elsewhere, new supply is also drying up. There have been some schemes that have been on the cards for a while that keep getting pushed further and further out. I think it is becoming a tight market, especially for 2022, 2023. There isn’t
a lot of supply coming up.”
That lack of supply of new space is an opportunity for FORE in Glasgow,
Mr Demeroutis added. “If you are an occupier that needs 50,000 square feet of space in Glasgow, there aren’t that many options available to you if you need that space in the next 24 months. You can definitely count them on one hand.”
Mr Demeroutis hails from Canada and has been based in the UK for more than 20 years, working in senior commercial real estate roles. Before founding FORE Partnership in 2012, he was previously a partner at
London-based Capricorn Investment Group, the family office of the first eBay president Jeff Skoll.
In addition to Cadworks, FORE, which is mostly backed by “ultra” high net worth investors, owns 50 Bothwell Street in Glasgow, and New Telecom House in Aberdeen.
Mr Demeroutis said he would be interested in investing in Glasgow further, though cautioned the prospect of a second independence referendum could result in investment decisions being put in hold, as happened following the Brexit vote. “We would definitely go again in Glasgow,” he said.