Scotland’s commercial property sector – seen as a broader barometer of economic activity – contributes almost £5 billion to the Scottish economy and supports more than 92,000 jobs, according to a new report.
The study has been compiled by the University of Strathclyde’s Fraser of Allander (FoA) Institute under commission by the Scottish Property Federation (SPF).
It found that the commercial property element of Scotland’s construction industry has a direct impact amounting to about £2.4bn to Scotland’s economy. However, when taking into account the additional spill-over effects of the industry, commercial property is estimated to have a total impact of almost £4.8bn.
The report notes that about 49,000 full-time equivalent (FTE) jobs are directly supported by the sector, when combining FTE employment in construction and property activities. And the additional indirect and induced effects helping support total FTE employment of roughly 92,000.
The report’s authors credited high-quality and effective commercial property as crucial to business activity. That said, they also identified a “worrying” lack of investable space, with the amount of new commercial property being built in terms of square feet down from the level seen a decade ago.
In 2009, new commercial property construction equated to 7.1 million sq ft but in 2017 the equivalent of only 1.6 million sq ft was constructed.
Similarly, while the value of sales of commercial property have grown in recent years to £3.2bn in 2016/17, the figure is “significantly” lower than a decade ago. The report goes on to show the potential for growth and concludes that a £100 million increase in new commercial property output benefits the economy benefits by a further £73m.
David Melhuish, director of the SPF, acknowledged challenges the industry has suffered in recent years, driven in part by poor consumer and business confidence. But he said there are “huge opportunities for the industry to grow as a valuable financial asset for investors”, and called for more work to boost Scotland’s overall supply of Grade A office stock.
Graeme Roy, director of the FoA Institute, said: “Our analysis shows that Scotland’s commercial property industry is an important barometer of economic activity… the sector continues to make an important contribution to the Scottish economy.”