scotland |
INTERESTING TIMES FOR SCOTTISH COMMERCIAL PROPERTY
property. With some exceptions – such as Aberdeen, which continues to feel the chill from low oil prices – the industrial and office sectors have experienced strong levels of take-up and diminishing supply of good quality
T Sven Macaulay
accommodation, most notably across the central belt. This strength has translated to
corporate occupiers finding it increasingly difficult to satisfy their requirements, and as a result having to make more compromises in terms of location or quality of accommodation. In parallel, there is a general concern among agents of a
he past 18 months have been generally buoyant for Scottish commercial
shortage of stock, particularly along the M8 corridor, a situation exacerbated by the low level of both pre-let and speculative development taking place. High construction costs are prohibitive and only the most sought-after locations can justify the rents or values to make new projects financially viable. A further effect of this paucity of high-
quality stock is the increasing focus of investors and landlords on secondary property and its refurbishment. It is still possible to acquire existing buildings and add value with refurbishment, sometimes coupled with the splitting of units to cater for occupiers seeking smaller accommodation where a premium rent can be secured. A good example is Tilstone’s premises
at South Gyle Crescent to the west of Edinburgh. A 47,500 sq ft warehouse with strong attributes – a large, secure yard and close to the M8 and A720 City Bypass – it could be occupied by a single tenant but also lends itself well to being split into units of 10,000 sq ft plus, a market sector currently seeing strong demand and a shortage of stock. Such adaptability is
reflected in the strong interest from prospective occupiers, and as such it is expected the premises will be fully let within a few months. The result in most locations is rising
rents and decreasing incentives – welcome news for investors and owners, who are increasingly invoking rent review clauses as their confidence of securing uplifts increases in line with the market. For occupiers, it means the post-downturn years of cheap commercial property are coming to an end. While demand currently remains
relatively strong, a degree of uncertainty will affect the market during 2016: the EU referendum, local elections, the price of oil and mooted changes to business rates will all have an impact. For owners, advisers and occupiers alike, these are interesting times indeed. Sven Macaulay is a partner based at
Gerald Eve’s Glasgow office. Contacts E:
smacaulay@geraldeve.com Gerald Eve LLP, 140 West George Street Glasgow G2 2HG W:
www.geraldeve.com
COMMERCIAL PROPERTY MONTHLY 2016
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