Lack of ‘premium’ buildings dents take-up of industrial space

Take-up of industrial units in Scotland slumped by more than a quarter last year amid a shortage of “premium buildings”, property experts have revealed.

Grayling Capital's purchase of the Titan warehouse at Eurocentral was one of the major deals of the year. Picture: Contributed

Businesses bought or rented some 5.8 million square feet of industrial space across the country in 2018, a fall of 29 per cent on 2017 and 34 per cent below the five-year average of 8.8 million sq ft, according to figures from commercial property adviser Colliers International.

West Scotland saw take-up of 2.3 million sq ft last year, down 22 per cent on the previous 12 months. The area accounts for about 40 per cent of Scotland’s total take-up.

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East Scotland saw take up fall from 1.3 million sq ft in 2017 to 1.1 million sq ft. The area, which includes Edinburgh, Falkirk and Grangemouth, actually saw an increase in activity in the 15,000–50,000 sq ft bracket, with more than 350,000 sq ft worth of take-up in that size range. Above this size, however, there was said to be little occupier activity over the course of the year as both demand and supply remained tight.

The largest deal in the east of Scotland was to packaging company Nampak, in which Colliers was joint agent for the landlord.

In the west, the largest deals were at Eurocentral, where BrewDog acquired the 129,000 sq ft Vertex building, and Grayling Capital, with a deal for the 122,000 sq ft Titan warehouse, advised by Colliers.

Iain Davidson, director of industrial and logistics at Colliers International’s Glasgow office, said demand had remained robust, despite Brexit uncertainty.

“We believe these figures are more to do with a lack of stock, as opposed to lack of occupier appetite,” he said. “In west Scotland, availability has been declining over the past few years to the present 7 per cent. Indeed, we are currently aware of a number of unsatisfied requirements due to the dearth of suitable properties – whether that be because of size, location, specification or tenure.

“The development pipeline is very limited with only 500,000 sq ft under construction or planned across west Scotland this year. This represents approximately two months’ take-up, based on the five-year take-up average.”

Lewis Pentland, associate director at Colliers’ Edinburgh office, said: “Day to day we are witnessing steady demand and it’s encouraging to see more development coming through the pipeline.

“Nevertheless, areas peripheral to Edinburgh are likely to experience further rental growth. There are size bands these new schemes won’t cater for and where little supply exists, so we would expect to see more ’design and build‘ in the east going forward.”

Demand for industrial space continues to come from a broad spectrum of sectors.