Scotland's industrial property sector tipped to rebound in months ahead - Colliers study

Scotland’s industrial property market is due to bounce back after an “uncertain” 2019, industry experts have predicted.

The 122,000 square foot Titan building at Eurocentral, which is being marketed by Colliers International. Picture: Contributed

Publishing its annual Scottish Industrial Trend Tracker, property adviser Colliers International said it had recorded 17 per cent growth in floor space transactions across Greater Glasgow last year. But, at 3.2 million square feet, the total space was still 7 per cent below the five-year average.

In the east of the country, volumes were 4 per cent down, year-on-year, at a total of about one million square feet.

Scotland as a whole saw take-up of 5.2 million sq ft in 2019, which reflected a reduction of 3.2 per cent on 2018’s activity. Compared to the five-year average, it was down 10.2 per cent.

Iain Davidson, director of industrial and logistics at Colliers’ Glasgow office, said suppressed demand should ensure a rebound in 2020.

“In a supply-constrained environment, Brexit uncertainty and a lack of grade A stock impacted activity in 2019,” he noted.

“The Scottish market will see a pick-up in demand and transaction levels in 2020. While those figures seem to suggest a loss of occupier appetite, which there definitely was due to Brexit uncertainty, the lack of available stock has also been a key factor in this slower performance.

“There are a number of unsatisfied requirements due to dearth of suitable buildings.”

Pipeline

In terms of the development pipeline, the firm estimates that just over 400,000 sq ft is currently planned over the next 12-18 months on a speculative basis across the whole of the Greater Glasgow area.

Davidson added: “Put into context, this represents only 1.5 months’ take-up, based on the five-year take-up average of 3.2m sq ft. While welcome, this is insufficient to meet demand in the short-medium term.”

Colliers expects to see larger requirements being primarily satisfied on a “build-to-suit” basis.

“Take-up doesn’t justify speculatively developing 50,000 sq ft-plus buildings to any great extent,” noted Davidson. “Moreover, these larger requirements are becoming more bespoke in terms of design, specification and low site coverage, something that the development market would be unwise to second-guess on a speculative basis.”

In the east, activity at the larger end of the market was dominated by sales, with purchasers taking advantage of favourable pricing, the report added. Sectorally, demand “largely reflected trends in the west”.

Lewis Pentland, at Colliers’ Edinburgh office, said: “Despite the slight drop in take-up last year, we recorded more enquiries in 2019 than we did the year before.”