Bullish outlook for Scots commercial property amid 'almost insatiable' appetite for retail warehousing and industrial sites

Industrial and retail-warehousing sites are leading investment in Scottish commercial property after overtaking offices in annual volumes for the first time since 2011, according to new figures from Knight Frank.

The commercial property consultancy found that retail-warehousing and industrial assets saw combined investment of £541 million last year, accounting for nearly a third of 2020’s overall figure.

This was an increase of 45 per cent on 2020’s total and also up from 2019’s £418m. Turning to offices, these were broadly consistent with 2020 at £355m, but still some way off 2019’s £739m. However, Knight Frank said it expected investment in offices to pick up this year as more people begin to return to workplaces and travel restrictions ease.

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Altogether, investors snapped up nearly £1.7 billion of commercial property in Scotland last year, up on the £1.4bn registered in 2020 – an increase of nearly a fifth. In 2019, the equivalent figure was £2.1bn.

Knight Frank highlights an industrial unit in Eurocentral let to Scania, which was sold for around £11 million last year. Picture: contributed.Knight Frank highlights an industrial unit in Eurocentral let to Scania, which was sold for around £11 million last year. Picture: contributed.
Knight Frank highlights an industrial unit in Eurocentral let to Scania, which was sold for around £11 million last year. Picture: contributed.
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Investment in shopping centres was buoyed by the £140m sale of Glasgow’s Silverburn by Hammerson, reaching £155m compared to £38m in 2019 and £27m in 2020.

In Scotland’s three largest cities, Glasgow saw the highest level of investment at £475m, with Edinburgh close behind on £429m. Aberdeen’s share was £54m, up by nearly half from 2020.

Overseas investors were again the most active buyers in Scotland, accounting for around 44 per cent of investment. Private-property companies represented just over a quarter of investment, while publicly quoted property companies and UK institutions comprised 9 per cent and 7 per cent of the total figure respectively.

Alasdair Steele, head of Scotland commercial at Knight Frank, said: “Last year’s investment figures highlight the changes to investor demand since the pandemic began, with an almost insatiable appetite for retail-warehousing and industrial property driven by changes to people’s shopping habits. That only looks likely to continue in 2022.


“Despite offices remaining some way off investment levels seen before the pandemic, prime offices remain highly sought-after, reflected in some keen yields on office deals towards the tail end of last year. We expect to see more activity in this sector in the months ahead, with Edinburgh and Glasgow remaining good value compared to many other major European cities.

“There is a weight of capital looking for opportunities, and Scotland’s market has proven its resilience over the last two years. With a return to office working and the continued strength of industrials and retail warehousing, there could be a lot of activity in Scottish commercial property over the next 12 months – particularly from overseas buyers, as travel restrictions ease.”

It was announced last month that a warehouse unit at Eurocentral next to the M8 motorway had been acquired by a private investor for some £11m.

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Knight Frank represented the private buyer in the off-market deal, and Euan Kelly, capital markets partner at the firm in Edinburgh, said: “This is a unique property secured on a long-term lease with good prospects for rental growth in a sector that is firing on all cylinders – not only in Scotland, but across the UK.”

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