Commercial property across Scotland’s cities yielded a mixed performance during the third quarter, but overall the market remained steady amid continuing demand for industrial space, new research has suggested.
According to the latest quarterly report from CBRE, returns during the three months to the end of September were 2.4 per cent, on a par with the same period in 2014. Industrials led the way at 2.5 per cent, followed by retail and offices on 2.4 and 2.1 per cent respectively.
Industrials and offices were both slightly lower compared to the second quarter, but retail returns improved, up from 1.9 per cent. However, industrials remained the strongest performer over the 12-month period, with a total return of 15.2 per cent versus 10.6 per cent for offices and 8.5 per cent for retail.
Campbell Docherty, senior director with CBRE in Scotland, said the recent improvement in retail performance has taken the sector to similar levels for the UK as a whole. But total returns across all sectors in Scotland have eased, in line with the national trend.
“Investment activity during the first half of this year was significantly behind the pace set in 2014 but this has picked up thanks to a busy summer, which saw a number of high-profile deals completed such as Eastgate Centre in Inverness, Atlantic Quay in Glasgow and Annan House, the new Aberdeen headquarters for EnQuest,” Docherty said.
“There are a number of larger investments in the market at present that if concluded by the end of the year are likely to show that both office and retail sectors exceed or at least match their 2014 performances.”
At city level, the variation in performance between sectors was “arguably as diverse as it has been at any time” for the past decade.
Aberdeen office returns continued to slip lower along with the slump in the offshore sector, but retail and industrial sectors in the North-east have proven more resilient to the fall-out from low oil prices. In Glasgow, returns from both offices and retail improved during the third quarter. Edinburgh posted the best industrial result.