Industrial property is ‘subdued’

MANUFACTURERS drove take-up of industrial property in a “subdued” UK market in the second quarter of the year, although Scotland did not see equivalent levels of demand, according to a new report.

Occupiers only let 139,000sq ft of industrial property in Scotland in Q2, as demand fell across the UK, according to DTZ Research’s Property Times UK Industrial report. The firm said the unfolding Greek sovereign debt crisis caused many potential occupiers to put decisions on hold, although a “large volume” of pent up take-up is expected for Q3.

DTZ said while warehouse occupier take-up fell, letting to manufacturers increased “dramatically” during the first half of 2011 driving 39 per cent of activity across the UK.

North of the Border, the most significant news of the quarter was the completion of the M74 link road which has the potential to “alter the distribution make-up of Scotland”.

Peter Fraser, senior surveyor at DTZ in Edinburgh, added that the firm was seeing “greater interest” from the renewables sector.

“The renewable energy sector continues to provide an exciting opportunity for growth in Scotland’s industrial market,” he said.

DTZ said there was little change in rental outlook with industrial rents continuing to lag behind both office and retail property.

However, the firm predicted that industrial property would be the only sector to experience accelerated rental growth over the next five years as the delayed recovery begins.