SCOTTISH PROPERTY REVIEW 2021 - Ryden
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
SCOTTISH PROPERTY REVIEW 2021
3 SUMMARY AND OUTLOOK 4 ECONOMY 6 PLANNING 8 RESIDENTIAL DEVELOPMENT 11 OFFICES 19 INDUSTRIAL 27 RETAIL AND LEISURE 29 INVESTMENT CONTENTS RYDEN SCOTTISH PROPERTY REVIEW 2021 | 2
THE COVID-19 PANDEMIC IS FORCING The Scottish residential property the full economic effects of the
market is comparatively resilient. pandemic may cool demand a little.
ADAPTATION TOWARDS AGILE WORKING New-build sales have increased
AND ONLINE SERVICES WHICH IS STILL and the market for well-located Structural change in the retail
sites is back to pre-COVID-19 property market is upon us, as
WASHING THROUGH THE PROPERTY MARKETS. concentration into prime locations
levels. The build-to-rent (BTR)
Although cities and regions remain critical, the sector is faring particularly well is exacerbated by the rapid
pandemic is rebalancing the markets towards and has positive prospects. acceleration of online shopping
and services. While multi-channel
a more sectoral emphasis. Office take up fell dramatically retailing will work for some, a
during lockdowns as occupier major reshaping of retail locations
requirements were postponed now looms.
or adjusted. Occupiers planning
a return to the office signal The property investment market
market recovery, albeit with more has picked up again. Although it
widespread adoption of agile is hampered by current restrictions
working and in some instances and once again a degree of political
reduced space requirements. uncertainty, there is ample money
for investment into industrial
Rapid growth in service sector and alternative property and
demand, allied to ageing stock and opportunistic potential elsewhere.
low vacancies, is creating a strong DR MARK ROBERTSON
industrial property market, although MANAGING PARTNER
SUMMARY
AND OUTLOOK RYDEN SCOTTISH PROPERTY REVIEW 2021 | 3
ECONOMY
GROWTH The RBS Purchasing Managers’ Index GDP GROWTH COMPARED TO LAST QUARTER (%)
During the third quarter of 2020 Scotland’s for December 2020 showed a marginal fall 20
economy grew by 16.0% in real terms. in Scottish business activity to 47.3. This
This leap in economic output reflects a was unchanged on November 2020 and
15
sharp recovery from the contraction of 19.4% continued to indicate a moderate contraction
suffered during the second quarter due to the in Scottish private sector activity. Provisional
pandemic lockdown. Recovery is incomplete survey figures from other sources for the 10
however and economic output during the UK indicate similar trends into January.
third quarter of 2020 was still 9.5% below The outlook for 2021 as a whole is however 5
the same period in 2019. By sector, output optimistic and at its highest level since
in services grew by 13.8% during the third February 2020 before lockdown. 0
%
Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020
quarter, production by 18.6% and construction
by 52%. EMPLOYMENT -5
Scotland’s unemployment numbers for
Provisional data for November 2020 suggests the three months to November 2020 fell
-10
that output fell by 1.4% after six consecutive by 1,000 to stand at 123,000, equivalent
months of growth, due to renewed tightening to an unemployment rate of 4.4%. This was
-15
of pandemic restrictions. The fall in output during a period when COVID-19 restrictions
was entirely in the service sector, notably were eased. The rate is down by 0.1% on the
accommodation, retailing, services and culture previous three months and is now below the -20
as those activities were restricted again. UK rate of 5%. Scotland’s overall employment
rate of 74.4% was however below the UK figure Source: Scottish Government
On a more positive note, the trade deal of 75.2%.
reached with the European Union in December
2020 avoided the worst case Brexit scenario, The Bank of England suggests that the
although industry-specific trading costs are real unemployment rate is being masked
now beginning to emerge. by the UK Government’s income support
schemes, mainly furlough but also payments
At the time of writing Scotland is in a further to some self-employed people, and is closer to
lockdown which is again acting as a blockage 7.5%. Unemployment is expected to increase
to economic activity, particularly once again in when this support is wound-down. In Scotland
consumer sectors such as retail, entertainment there are notable job losses in the retail and
and leisure, and travel. leisure sectors as well as some in the offshore
industry, and across wider sectors including
manufacturing and financial services.
RYDEN SCOTTISH PROPERTY REVIEW 2021 | 4
ECONOMY
OUTLOOK anticipate only 2% growth during 2021 due
The most likely immediate outlook is for to a further decline in output of 5% projected
a further economic contraction across late for Q1 2021. Current economic forecasts
2020/ early 2021 due to the ongoing pandemic are reasonable indicators of the anticipated
restrictions suppressing economic activity. shape of the recovery, but less so of the exact AS LOCKDOWNS CONTINUE,
This would yield a double-dip recession, but timing although as the vaccination programme RECOVERY HAS BEEN PUSHED OUT.
with the second later dip being much shallower progresses at pace the prospects of a strong
than the slump experienced during Q2 2020. recovery this year are improving.
Fraser of Allander Institute provides a range Property market recovery in Scotland is
of scenarios for medium term economic expected to follow a slow path to normalisation,
growth. Each of the scenarios anticipates with variation in impacts and timing by sector
-11.3% growth in 2020 followed by between due to the specific effects of the pandemic,
5.4% to 7.5% growth in 2021. As lockdowns and easing of restrictions over time. Full
continue, recovery has been pushed out, recovery to pre-crisis levels of market activity
as is seen in the most recent forecasts from in Scotland is likely to take until 2023 on a mid-
the Scottish Fiscal Commission which now range scenario, within a range of 2022 to 2024. SCOTTISH ECONOMIC GROWTH SCENARIOS:
2020 TO 2025 BASED UPON PRE-CRISIS LEVELS.
120
100
Index of GDP
80
60
2020 2021 2022 2023
Pessimistic Central Optimistic
Source: Fraser of Allander Institute Economic Commentary December 2020
RYDEN SCOTTISH PROPERTY REVIEW 2021 | 5
PLANNING
In response to the The Coronavirus (Scotland) Act 2020 (the Act)
37.5 WEEKS
was passed in April 2020. The measures in
pandemic Scotland’s the Act were originally limited for the duration Major housing applications
of the pandemic and were due to expire on 30 decided on average*
planning system has September 2020, but were extended through
additional legislation to 31 March 2021 and can
experienced delays to the be extended for a further 6 months if required.
national planning reform The Act extends the life span of
agenda and significant unimplemented planning permissions.
9.1 33.5
Those due to expire during the emergency
legislative changes. period now have 12 months extension
beginning with the date that the Act came into
force. This was intended to prevent planning
permissions expiring in circumstances where
developers are powerless to implement them.
A similar length of extension applies to the WEEKS WEEKS
time periods for making applications for the
approval of Matters Specified in Conditions. Average decision time Major Development planning
for Local Development decisions were quicker
The Scottish Government’s priority through planning decisions on average
the Act is to maintain a functioning planning
system, including encouraging a reasonable
and pragmatic view on enforcement action,
flexibility of staged payments of Section 75
contributions, changes in the Development
Management Regulations 2013 to suspend
307
the requirement to carry out a public event
as part of pre-application consultation, and
the use of virtual committee meetings as
well as increased delegated decision-making
powers to officers.
DECISIONS
Total number of Major
Development decisions
*Figures exclude major applications subject to
processing agreements (just over a third) where
timescales for decisions are agreed in advance.
RYDEN SCOTTISH PROPERTY REVIEW 2021 | 6
A significant and arguably positive outcome
is the use of digital pre-application consultation.
The Town and Country Planning Opportunities set out in the Statement are opportunities to demonstrate a shortfall and,
(Miscellaneous Temporary Modifications) geared towards the primary goal of net-zero when it is demonstrable, greater difficultly
(Coronavirus) (Scotland) Regulations 2020 emissions by 2045. NPF4 will become part of converting that position into a planning
temporarily suspends the requirement for the statutory Development Plan and it will also permission because of the increased
a public event as part of the Pre-Application incorporate Scottish Planning Policy (SPP). weight given to the development plan. PLANNING REFORMS CONTINUE
Consultation (PAC) process. This came into TO PROGRESS BUT HAVE ALSO
effect on 24 April 2020 and contains provisions The SPP was subject to critical amendments In the future, Scottish Ministers will have SUFFERED DELAYS.
to allow alternative online consultation to introduced by the Scottish Government to consider adopted Regional Spatial
take place. Digital consultation has primarily in January this year. Those amendments Strategies (RSS) in the preparation,
taken the form of a live, online chat event were originally set out in a consultation revision or amendment of the NPF. Planning
based around a bespoke website hosting the paper entitled Scottish Planning Policy authorities must also have regard to them in
exhibition proposals. This change in approach (SPP) and Housing – Technical Consultation. the preparation of LDPs. It may take some
has been received positively, with members This was a far-reaching proposal which time for fully finalised RSS to emerge. Some
of the public able to access the internet from sought to fundamentally change the terms authorities have established ways of regional
home. Ryden’s own experience has also been of SPP (2014), but, rather than clarifying, working, whilst for others this may involve
positive, suggesting that perhaps more people it represented a change to national policy new partnerships, collaborations and a fresh
who may not otherwise have attended a including the presumption in favour of perspective on strategic planning matters.
public exhibition have taken time to go online. sustainable development and the definition The statutory duty to produce RSS has not yet
While this has not translated into substantial and calculation of the 5 years effective been enacted. The review of the NPF presents
feedback, digital consultation seems likely housing land supply. The proposed an opportunity for early thinking on RSS, so
to have a place in the future of the public amendments were founded on a persistent that initial strategic priorities can be built into
consultation process. misunderstanding regarding how development the emerging statutory development plan.
delivery, particularly residential development,
Meetings with interested parties, statutory operates in practice. This gives rise to policy
consultees and planning authorities have frameworks which act as stumbling-blocks
also taken place online. These have largely rather than as a stepping-stones.
worked well as a supplementary approach
but their effectiveness is limited. The ability Following consultation, the Scottish
to discuss proposals face-to-face with Government did indeed implement changes to
potential objectors and consultees should, the SPP in January 2021. The presumption in
and undoubtedly will, be brought back favour of development that contributes towards
once the COVID-19-related restrictions sustainable development was retained in an
are lifted sufficiently. amended format. The key change is that the
‘presumption’ will no longer apply if Local
Planning reforms continue to progress Development Plan (LDP) policies are out of
but have also suffered delays due to the date and/or there is a shortfall in the housing
pandemic. A Position Statement for National land supply. The method for calculating the
Planning Framework (NPF) 4 was published effective housing land supply will no longer
in November 2020 and a draft is expected to take account of shortfalls over previous plan
be laid before Parliament in Autumn this year. periods. In essence, this means reduced
RYDEN SCOTTISH PROPERTY REVIEW 2021 | 7
RESIDENTIAL
DEVELOPMENT
DEVELOPMENT LAND MARKET NEW BUILD HOMES SALES VOLUME
Despite the turmoil caused by COVID-19, While the first half of 2020 understandably 1,600
and in particular the inability for housebuilders saw housebuilder demand for new land
1,200
to develop out consented sites at previously stall, more recent site sales suggest that
1,000
anticipated timescales, the Scottish residential the market for well-located sites is back
Number
development market has remained resilient to pre-COVID-19 levels. 800
compared with many other sectors. 600
For example a site in Midlothian with planning 400
Data on new home completions is currently consent for 94 units attracted eight bids in 200
unavailable for 2020 but sales volumes for December 2020. Highest land values remain
0
new build homes from HM Land Registry in and around Edinburgh with greenfield rates Dec 19 Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20 Jul 20 Aug 20
indicate a notable increase in the second per acre ranging from £1.0 to £2.0 million. Source: HM Land Registry
half of the year from a low point of 128 units In Glasgow, this range is lower at £0.5 to
in May 2020 to 825 units in August 2020. £1.0 million per acre. In Aberdeen, £0.5 to
This has no doubt been fuelled by pent up £0.8 million per acre is being offered. These PERCENTAGE CHANGE (YEARLY) IN AVERAGE HOUSE PRICES IN SCOTLAND
demand and home buyers reassessing their greenfield rates apply to larger sites with (ALL HOUSE TYPES)
property requirements during lockdown. capacity for in excess of 50 units. 6
The latest figures provided by HM Land The Build To Rent (BTR) sector continues to 4
Registry indicate that Scottish house prices compete with the mainstream housebuilding
increased by 6.0% in the 12 months to October market, particularly for in-city locations. This Percent 2
2020, outperforming the UK rate of 5.4%. is driving land values for flatted developments.
The annual volume of sales transactions The increasing targets being set by local 0
(all properties) in Scotland decreased by 33% authorities for the provision of affordable
which is in line with the remainder of the UK. housing continues to generate developer -2
interest with investors also keen to participate Dec 19 Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20 Jul 20 Aug 20 Sep 20 Oct 20
in this growing market. Source: HM Land Registry
RYDEN SCOTTISH PROPERTY REVIEW 2021 | 8PIPELINE DEVELOPMENTS BUILD TO RENT (BTR)
Developer and investor interest in the BTR
BTR DEVELOPMENT DETAILS
sector continues to build momentum. The
KELVIN LIVING, GLASGOW 424 UNITS IN THE WEST END OF GLASGOW HAS A LIVE DETAILED PLANNING development pipeline is increasing, however
APPLICATION BY KR DEVELOPMENTS WITH FUNDING PARTNERS CURRENTLY the delivery of operational developments
BEING SOUGHT is painfully slow. During 2020, ignoring Mid
Market Rent (MMR) developments, there
CANDLERIGGS SQUARE, GLASGOW DRUM PROPERTY GROUP AND STAMFORD PROPERTY INVESTMENTS JOINT was only one BTR development completed.
VENTURE IN THE MERCHANT CITY WITH PLANNING PERMISSION IN PRINCIPLE The Point, Schoolhill, Aberdeen comprises
FOR MIXED-USE DEVELOPMENT. A DEAL FOR THE BTR ELEMENT HAS BEEN 342-units in the city centre developed and
SIGNED WITH LEGAL & GENERAL AND A DETAILED APPLICATION FOR 342 UNITS operated by Dandara Living providing studios,
WILL BE SUBMITTED SHORTLY. COMPLETION IS EXPECTED JUNE 2022 apartments and suites. Lettings are reported
to be in line with expectations.
HOLLAND PARK, GLASGOW MODA LIVING SECURED A FUNDING PACKAGE FROM APACHE CAPITAL AND
HARRISON STREET FOR THEIR 433 UNIT CITY CENTRE DEVELOPMENT. THE Scotland’s BTR pipeline is sitting at c.9,000
APPOINTMENT OF A CONTRACTOR IS REPORTED TO BE IMMINENT units. Significant site starts during 2020
included Moda Living’s prime city centre
EDINBURGH PARK, EDINBURGH PARABOLA SECURED DETAILED PLANNING CONSENT FOR 1,737 UNITS OF WHICH Springside in Edinburgh: Phase 1 comprises
C. 1,180 ARE LIKELY TO BE BTR. DISCUSSIONS WITH POTENTIAL PARTNERS FOR 337 apartments in two buildings with
THIS ASPECT OF THE SCHEME ARE UNDERWAY anticipated completion dates of Autumn 2021
and Spring 2022, while the 139 apartment
FREER STREET, EDINBURGH VASTINT ARE ON SITE WITH THE CONSTRUCTION OF 175 UNITS AS PART OF Phase 2 has an anticipated completion date
THEIR MIXED-USE DEVELOPMENT THAT ALSO INCLUDES A MOXY HOTEL AND of early 2023. Legal and General’s Buchanan
OFFICE SPACE Wharf in Glasgow’s Tradeston just south of the
River Clyde and city centre is also on site to
BONNINGTON, EDINBURGH PLATFORM HAS LODGED A DETAILED APPLICATION FOR A 527-BED BTR deliver 324 units on completion in June 2022.
DEVELOPMENT ON THE SITE OF THE FORMER JOHN LEWIS DEPOSITORY
AND A FURTHER SITE ACQUIRED FROM THE CITY OF EDINBURGH COUNCIL During 2020, a number of further, high profile
large scale BTR developments made progress
towards delivery by securing funding, and/or
moving through the planning system.
RYDEN SCOTTISH PROPERTY REVIEW 2021 | 9BTR OUTLOOK
Based on the progress made on these
schemes and others at pre-planning stages,
the prospects for a significant increase in
completions over the next few years looks
positive. The sector has fared particularly
well during the pandemic with rent collections
across the UK holding up well and occupier
demand increasing as tenants seek better
quality accommodation. Market sentiment
suggests that yield compression is likely
in 2021 given the weight of investment money
targeting the sector.
The Point, Schoolhill, AberdeenCITY CENTRE TAKE UP DEMAND PRIME OFFICE RENTS
Office take up in Glasgow city centre in Unsurprisingly, the level of immediate
35
2020 totalled 256,000 sq.ft. comprising 60 demand has been impacted by the pandemic.
deals. This is only 30% of 2019’s take up Many occupiers are taking the opportunity to
and half as many transactions (although review future office requirements and pausing 30
one large transaction on the boundary their acquisitions. Some are benefiting from
of the city centre market area is noted below). flexibility offered by existing landlords who 25
are keen to retain the rental income, even
Many occupier requirements were placed on a short term basis.
£ per sq ft
on hold as result of the sudden impact of the 20
lockdown. This in turn reduced transactional There remains however a positive pipeline of
activity, although some occupiers progressed occupiers progressing relocation projects, with 15
revised requirements to a conclusion, and further Grade A space presently under offer.
some took the opportunity to secure flexible
10
lease extensions. The headline rental for the city centre remains
£32.50 per sq.ft. (secured at 177 Bothwell Street).
The resultant 5-year average take up is now 5
758,000 sq.ft. (reduced from 827,000 sq.ft.).
0
All office take up during 2020 in Glasgow
2016 2017 2018 2019 2020 2021
was in refurbished stock and in buildings (projected)
with floorplates smaller than 10,000 sq.ft. Edinburgh Glasgow Aberdeen
CITY CENTRE DEALS
ADDRESS SIZE OCCUPIER SECTOR
(SQ.FT.)
2F - 4F, 310 28,216 WESCOT CREDIT OUTSOURCING
ST VINCENT STREET SERVICES
5F - 6F, SENTINEL, 103 18,268 SEDGEWICK LOSS ADJUSTERS
WATERLOO STREET INTERNATIONAL
UK
OFFICES
1F - 2F, SENTINEL, 103 18,252 CHUBB SE INSURANCE
WATERLOO STREET
GF - 2F, 220 14,035 OREGA BUSINESS
ST VINCENT STREET CENTRE
GLASGOW RYDEN SCOTTISH PROPERTY REVIEW 2021 | 11SUPPLY CITY CENTRE NEW BUILDS
The supply of Glasgow’s city centre existing
ADDRESS SIZE ESTIMATED DEVELOPER
prime Grade A office stock is very limited,
(SQ.FT.) DELIVERY
with only 6,400 sq.ft. remaining at 1 West
DATE
Regent Street.
2 ATLANTIC SQUARE 96,650 Q2 2021 BAM
This total will be replenished by three PROPERTIES/
buildings under construction in the city centre TAYLOR CLARK
totalling 496,000 sq.ft. Noting that 46% of
this stock has been pre-let, the availability of CADWORKS 94,431 Q3 2021 FORE
Grade A space will be c. 272,000 sq.ft. upon PARTNERSHIP
completion, minus any further pre-lets.
177 BOTHWELL STREET 305,000 (76,860 Q3 2021 HFD
There are no further new builds scheduled REMAINING)
to start on site in 2021 at the time of writing.
The total vacancy for the city centre is in the A NUMBER OF SIGNIFICANT FULL BUILDING REFURBISHMENTS COMPLETED IN 2020
order of 1.042 million sq.ft. (5.3% vacancy rate) ADDRESS SIZE DELIVERY DEVELOPER
down from 1.28 million sq.ft, in 2019. (SQ.FT.) DATE
55 DOUGLAS STREET 85,390 Q1 2020 SIGNAL
INVESTMENTS
THE INK BUILDING, 34,495 Q1 2020 AMBASSADOR
DOUGLAS STREET GROUP
ONYX, 215 BOTHWELL 57,018 Q2 2020 CEG
SUPPLY AND TAKE UP (CITY WIDE) STREET
4.0
124 ST VINCENT STREET 36,459 Q4 2020 SHELBORN
3.5 INVESTMENTS
3.0
FURTHER REFURBISHMENTS WILL COMPLETE OR COMMENCE IN 2021
2.5
ADDRESS SIZE DELIVERY DEVELOPER
(SQ.FT.) DATE
Million sq.ft.
2.0
6 ATLANTIC QUAY 78,459 Q3 2021 HORIZON
CAPITAL
1.5
200 BROOMIELAW 79,300 Q4 2021 AM ALPHA
1.0
69 BUCHANAN STREET 22,873 Q1 2022 WARBURG
0.5
THE MET TOWER, NORTH 120,000 2022 OSBORNE+CO
HANOVER STREET
0
2016 2017 2018 2019 2020
Supply Take-up
RYDEN SCOTTISH PROPERTY REVIEW 2021 | 12THE SUPPLY OF GLASGOW’S CITY CENTRE EXISTING PRIME GRADE A OFFICE STOCK IS VERY LIMITED WITH ONLY 6,400 SQ.FT. REMAINING AT 1 WEST REGENT STREET.
PERIPHERAL MARKET OUTLOOK PERIPHERAL DEALS
Take up in Glasgow’s peripheral office market Coinciding with the COVID-19 vaccine roll-out
ADDRESS SIZE OCCUPIER SECTOR
equated to 204,057 sq.ft. in 23 deals during and an assumed gradual easing of office
(SQ.FT.)
2020. working restrictions, a recovery of the market
is anticipated from Q2 2021 onwards. While 220 HIGH STREET 90,528 SCOTTISH PUBLIC SECTOR
This is a marked increase on 2019’s floorspace greater flexibility and more agile working may GOVERNMENT
take up, but with half of the number of deals. in some cases reduce the size of future office
The floorspace take up is boosted by the requirements, equally many occupiers seek a PAVILIONS 3 & 4, 30,742 UNIVERSITY OF EDUCATION
letting to the Scottish Government at 220 High return to the office to enhance productivity and BERKELEY SQUARE GLASGOW
Street, which is in fact on the immediate edge combat some of the negative experiences that
of the city office market area and within the many workers are encountering working solely SKYPARK, 64-68 29,511 SPIRE GLOBAL SPACE
wider defined city centre. from home. FINNIESTON SQUARE TECHNOLOGY
The figures are bolstered by occupier There is an expectation of tenant ‘grey’
expansion at Skypark by Spire Global (surplus) space returning to the market. OUT OF TOWN DEALS
and One Search Direct, and University of So far there have only been relatively ADDRESS SIZE OCCUPIER SECTOR
Glasgow’s acquisition of Vodafone’s surplus limited examples of this, which is hopefully (SQ.FT.)
accommodation in Berkeley Square. an encouraging sign that most occupiers
will seek to retain their current footprint, but BUILDING 8 (PART), 30,123 AVIVA INSURANCE
OUT OF TOWN MARKET it is also anticipated that further occupiers MAXIM OFFICE PARK
Take up in Glasgow’s out of town office market may seek to offload surplus space in the
beyond the city boundary was 155,690 sq.ft. in short to medium term. BUILDING 9 (PART), 28,485 LUMIRAR DX LIFE SCIENCE
38 deals during 2020. Notably, the overall take MAXIM OFFICE PARK
up exceeded that of 2019 with a comparable Best in class office space remains in short
number of transactions concluded. supply. This will continue throughout 2021 ROYAL BURGH HOUSE, 24,606 EASY HEAT FACILITIES
and assist with rental growth at the upper RUTHERGLEN SYSTEMS MANAGEMENT
There continues to be extensive supply end of the market. In the absence of further (PURCHASE)
of accommodation to the east, however speculative development, a shortage
significant lettings were secured at Maxim of new build office space in the medium LIGHTYEAR, GLASGOW 22,369 NHS PUBLIC SECTOR
Office Park and further take up at Hamilton term is forecast. AIRPORT BUSINESS PARK
International Park and Trilogy, Eurocentral.
Opportunistic owner occupier purchases
continue to be popular in the out of
town market with a number of buildings
changing hands.
WITH THE COVID-19 VACCINE ROLL
OUT AND AN ASSUMED GRADUAL EASING
OF OFFICE WORKING RESTRICTIONS,
A RECOVERY OF THE MARKET IS
ANTICIPATED FROM Q2 2021 ONWARDS.
RYDEN SCOTTISH PROPERTY REVIEW 2021 | 14OFFICES
EDINBURGH
CITY CENTRE DEALS TAKE UP CITY CENTRE
ADDRESS SIZE OCCUPIER SECTOR In 2020 Edinburgh’s office market delivered 181,927 sq.ft. was transacted in the city centre,
(SQ.FT.) a total of 301,801 sq.ft. of take up across 100 representing 60% of city-wide take up. Grade
deals. This is a 34% decrease in the number A and high quality accommodation accounted
THE HAYMARKET 280,000 BAILLIE GIFFORD FINANCIAL of deals and a 48% reduction in floorspace for 52% of city centre take up.
(PRE-LET) SERVICES taken up against 2019, and is 65% below
the 5-year average. Prime rents for Grade A accommodation
10 GEORGE STREET 20,072 ARUP GROUP ENGINEERING remain consistent at c. £35 per sq.ft. with
These statistics do not include the landmark incentives holding at around 12-15 months
QUARTERMILE 3 14,641 SMARTSHEET TECHNOLOGY letting of 280,000 sq.ft. at The Haymarket for a 10-year lease commitment to the highest
to Baillie Gifford. This is Edinburgh’s largest quality covenant. There have been examples
QUARTERMILE 1 9,565 PARSLEY BOX FOOD ever pre-let deal and notably was signed of specific floors exceeding this tone, such
halfway through the year despite the as the top floor lease on 40 Princes Street
pandemic. This building will complete in taken by Cadence CPC at £37.50 per sq.ft.
2022 and will be included in the statistics
6-months pre-completion. If included in 2020
then floorspace take up would have declined
by only 7% year-on-year.
RYDEN SCOTTISH PROPERTY REVIEW 2021 | 15PERIPHERAL SUPPLY PERIPHERAL DEALS
The West Edinburgh office market attracted Total office supply across Edinburgh at
ADDRESS SIZE OCCUPIER SECTOR
only 52,916 sq.ft. take up across 13 deals in end Q4 2020 was 1,842,446 sq.ft., of which
(SQ.FT.)
2020. Prime rents are steady at around £20 588,717 sq.ft. or 32% comprises Grade A
per sq.ft. for refurbished options in the South or good quality refurbished Grade B space. THE CURVE, HERIOT-WATT 13,197 FUGRO GB ENGINEERING
Gyle area, rising to above £23 per sq.ft. for This is an increase of 20% since the beginning RESEARCH PARK MARINE
refurbished Grade A space on Edinburgh Park. of 2020, although some of the risk within this
The only notable deal in excess of 10,000 supply may potentially be redeveloped. LINKS HOUSE, LINKS PLACE 4,828 ABACO SYSTEMS TECHNOLOGY
sq.ft. was the letting of 13,197 sq.ft. at The
Curve, Heriot-Watt Research Park to Fugro As in Glasgow, there is not yet any dramatic
GB Marine. upswing in release of ‘grey’ (surplus) office
space. Most occupiers are still reviewing the
In North Edinburgh a total of 13,675 sq.ft. effects of COVID-19, however some have
transacted across 9 deals with prime rents already reduced their density of occupation
sitting at around £18 per sq.ft. The most and footprint, embracing a more agile style
notable transaction was the letting of 4,828 of working.
sq.ft. at Links House to Abaco Systems.
The current city development pipeline will
deliver much needed Grade A supply through
2020 - 2022, while further opportunities on
the horizon include notable buildings such
as Aviva’s redevelopment of Roseberry House
at Haymarket.
SUPPLY AND TAKE UP
2.0
1.5
Million sq.ft.
1.0
0.5
0
2016 2017 2018 2019 2020
Supply Take-up RYDEN SCOTTISH PROPERTY REVIEW 2021 | 16OUTLOOK
As in Glasgow, the Edinburgh office market In that context, occupiers continue to commit
is adjusting to the anticipated post-pandemic to a physical office environment and supply
world. Some of the specific outcomes remains constrained in Edinburgh with limited
already emerging are reductions in density new developments being delivered this year.
and occupation, increased lease flexibility Rents have largely held at pre-pandemic
and alternative solutions such as serviced levels due to competition for the best space
offices and bespoke options. This is allied as a result of the constrained supply dynamic
to reviews of all occupational costs particularly in the city centre. ‘Grey’ space release
service charges and increased awareness within city centre buildings is expected and
of environmental impacts, wellbeing and in West Edinburgh has already started with
use of technology. 60,000 sq.ft. released by Sainsbury’s Bank
at Edinburgh Park.
PRIME CITY CENTRE AVAILABLE SPACE CITY CENTRE NEW BUILDS
ADDRESS LANDLORD TENANTS AVAILABLE ADDRESS DEVELOPER SIZE DELIVERY DATE
(SQ.FT.) (SQ.FT.)
2 SEMPLE STREET GSS WOMBLE BOND 18,288 CAPITAL SQUARE, BAM PROPERTIES/ 54,012 Q2 2020
DEVELOPMENTS DICKINSON 62 MORRISON HERMES (50% PRE-LET)
HUAWEI STREET INVESTMENT
MANAGEMENT
10 GEORGE STREET STANDARD LIFE ARUP GROUP 49,332
ABERDEEN 2 FREER STREET VASTINT 59,554 Q2 2021
(HEAD-TENANT)
THE HAYMARKET M&G REAL 90,000 Q4 2021/Q1 2022
1-7 EXCHANGE STANDARD LIFE SHEPHERD & 28,809 (PHASE 1) ESTATE
CRESCENT ABERDEEN WEDDERBURN
(HEAD-TENANT) AMAZON EXCHANGE EP3 DEVCO 18,840 Q1/Q2 2022
JLL PLACE 4
RYDEN
WEST EDINBURGH NEW BUILDS
SALTIRE COURT, TIGON 7 CMS 31,401
CASTLE TERRACE KPMG ADDRESS DEVELOPER SIZE DELIVERY DATE
CLOSE (SQ.FT.)
BROTHERS
SHOOSMITHS 1 NEW PARK PARABOLA 84,990 Q4 2021
DELOITTE SQUARE,
EDINBURGH
20 WEST REGISTER BAILLIE GIFFORD SUITES UNDER 30,000 PARK
STREET (HEAD-TENANT) OFFER
24-25 ST ANDREW ARDSTONE DEVELOPMENT 48,047
SQUARE CAPITAL OPPORTUNITY
(REFURBISHMENT)
RYDEN SCOTTISH PROPERTY REVIEW 2021 | 17DEALS TAKE UP SUPPLY
In 2020 Aberdeen’s office market delivered Total office supply across Aberdeen at
ADDRESS SIZE OCCUPIER SECTOR
a total of 424,797 sq.ft. of take up across 53 the end of 2020 was 2.648 million sq.ft.
(SQ.FT.)
deals. This is a 37% decrease in the number This is an increase of 9% since the beginning
B1 ABERDEEN 102,331 BP OIL & GAS of deals, but is only a 17% reduction in overall of 2020 and reflects a high vacancy rate
INTERNATIONAL floorspace take up when compared to 2019. as there continue to be many redundant
BUSINESS PARK Take up remained 12% above the 5-year office properties.
average. This is a reasonable performance
THE QUAD, HOWEMOSS 55,527 STORK OIL & GAS in the context of the pandemic and subdued No new developments are planned at the time
AVENUE, DYCE TECHNICAL oil prices during 2020. of writing, and with another lockdown in place
SERVICES many organisations are continues to review
(PURCHASE) The majority of office deals in 2020 were how they will operate post-pandemic.
smaller, with only nine in excess of 10,000
WELLHEADS CRESCENT 19,233 C7 HEALTH LTD TECHNOLOGY sq.ft. The largest deal was at Aberdeen Grade A offices within the city centre are
(PURCHASE) International Business Park where BP sub- filling up. The Capitol is almost full at c. 88%
leased 102,331 sq.ft from Aker Solutions. let; Marischal Square (9,553 sq.ft.) is now
PROSAFE HOUSE, 16,936 ARNOLD CLARK AUTOMOBILES 65% let having attracted new tenant NESPF;
GREENWELL ROAD, AUTOMOBILES The West End, Dyce and city centre are and Silver Fin is c. 40% let with new tenants
TULLOS LTD (PURCHASE) the most popular locations with 26%, 19% Neo Energy (12,722 sq.ft.) and Prosafe
and 17% by number of lettings respectively. Offshore Ltd (6,080 sq.ft.).
KIRKHILL HOUSE, 16,212 EXPRO OIL & GAS
DYCE DRIVE Prime rents for Grade A accommodation OUTLOOK
remain consistent at £32.50 per sq.ft. and As with Glasgow and Edinburgh, the pandemic
THE FOURCOURT 15,015 EQUINOR OIL & GAS are likely to remain at that level with large will continue to hinder demand and take up
OFFICES, PRIME FOUR incentives still being provided. over the short term. The market is expected
BUSINESS PARK to stabilise later in the year and many
organisations are embracing new working
patterns which may change their office
needs and bring new requirements to the
market. This in turn with the loss of obsolete
stock should hopefully see a lower, more
balanced supply in the Aberdeen office
market by early 2022.
OFFICES
SUPPLY AND TAKE UP
3.5
3.0
2.5
Million sq.ft.
2.0
ABERDEEN
1.5
1.0
0.5
0
2016 2017 2018 2019 2020
Supply Take-up
RYDEN SCOTTISH PROPERTY REVIEW 2021 | 18INDUSTRIAL QUITE SIMPLY, AN INCREASING
NEED FOR WAREHOUSING IS
MEETING A LIMITED SUPPLY
GLASGOW AND
OF AVAILABLE BUILDINGS AND
DEVELOPMENT LAND.
WEST OF SCOTLAND
TAKE UP DEALS
Our 2020 report commented that the industrial
ADDRESS SIZE OCCUPIER SECTOR
market was enjoying a purple patch. It is fair
(SQ.FT.)
to say that the patch is now an even deeper
shade of purple. The pandemic has turbo GLASGOW BUSINESS PARK 144,000 AMAZON FULFILMENT
charged the market and accelerated many
longer term trends. The total take up in EVOLUTION COURT, HILLINGTON PARK, GLASGOW 67,000 DOUGLAS LAING & CO LTD DRINK
Glasgow and west central Scotland for
2020 is c. 3.54m sq.ft. WESTWAY, RENFREW 60,000 NMIS – NATIONAL MANUFACTURING MANUFACTURING
INSTITUTE SCOTLAND
Quite simply, an increasing need for
warehousing is meeting a limited supply of 1 FULLARTON DRIVE, CAMBUSLANG 74,560 SGN ENERGY
available buildings and development land.
Demand is rising as Brexit creates a need for TREEBY HOUSE, OLD QUARRY ROAD, CUMBERNAULD 36,000 DPD LOGISTICS
more warehousing to accommodate increased
stock levels, while a wider range of businesses TITAN, EUROCENTRAL. 129,000 STANFORD LOGISTICS (PURCHASE) LOGISTICS
transferring from other sectors such as
traditional retailing require warehousing to GARTCOSH BUSINESS PARK 18,000 DX NETWORK LOGISTICS
service an increased online presence, and
44 FULLARTON DRIVE, CAMBUSLANG 38,360 SIEMENS ENGINEERING
to accommodate the massive increase in
demand from the delivery sector servicing 120 CAMBUSLANG ROAD, GLASGOW 29,287 FERRARIS PISTON SERVICES WHOLESALE AND
these businesses. The pandemic has fast DISTRIBUTION
tracked what was a gradual transformation
and achieved in 12 months what may
otherwise have taken 5 to 10 years.
With restaurants closed, many will have
tried home delivery options. Cue the
emergence of ‘dark kitchens’, commercial
kitchens within industrial properties delivering
food. This sector is here to stay as most
restauranteurs will tap into the growing
market to some degree.
RYDEN SCOTTISH PROPERTY REVIEW 2021 | 19There has been a rise in demand for trade As the same time, courier companies are The development response to this increased
counter units from retailers closing high street struggling to secure enough existing space demand is building up, however such interests
shops and moving online. Technology means to cope with immediate demand and are struggle to find readily developable land in
that the sales floor is now on Facebook, likely to transition to bespoke facilities in time and around Glasgow. Despite areas of derelict
Instagram and Twitter. Deals have completed once future demand levels are more fully land remaining, the costs of remediating and
with florists, party gift retailers, beauticians understood. In the interim, they are taking delivering some of these remains prohibitive
and a raft of others. The converts find it easier serviceable units such as the 36,000 sq.ft. for the private sector. Rental levels would
to hold a larger variety and quantity of stock in Treeby House in Cumbernauld which has been require to be even higher than current new
a shed than in a traditional shop. Loading and leased by DPD at £6 per sq.ft. to serve the build levels to have any prospect of the private
dispatch tasks are also easier as is access for Stirling area, and Hermes taking the 94,000 sector taking on such additional costs. For now
click-and-collect. sq.ft. Colossus II at Eurocentral. Meanwhile at the market will remain constrained and larger
Clyde Gateway East, DHL is now in occupation businesses may find it difficult
There has also been increased demand from of a new 50,000 sq.ft. bespoke facility which to secure new premises.
the home improvement industry; bathrooms, will be used as an exemplar project for their
kitchens, carpets and flooring. Many people wider UK ambitions. Rental growth continues to be strong given
have identified improvement projects after the high levels of occupancy and renewal
months of being forced to spend more time Not all requirements lead to lettings however, terms are frequently accepted with relatively
in their own homes. there is an unprecedented number for Greater little negotiation. Recently achieved rents
Glasgow and a good proportion of these are range from £4 - £11.25 per sq.ft. dependent
These various strands of demand are likely to take space over the next 18 months if on quality and location. According to CoStar,
displacing market activity onto secondary and it can be identified either from the remaining the average rent across the entire leased stock
tertiary locations and older stock. This is existing stock, the limited new build product is c. £5.50 per sq.ft.
also as a result of some landlords adopting on site, or via pre-lets. Increasing activity in
a far more stringent tenant selection policy the re-modelling of existing space to meet
and excluding sectors such as motor trade. emerging demand is also expected as well
as redevelopment of outmoded buildings and
Overall, the market is heading towards estates, particularly as energy performance
a position where the vacancy of some becomes more important.
properties will be due to location or a need
for improvement works, rather than a lack SUPPLY
of demand. According to CoStar, the Greater Glasgow
market has a vacancy rate of 4.3% which
The most active occupier in the market rises to a total availability rate of 5.8% with
is Amazon. The number of requirements the inclusion of occupied premises which
from the company is astonishing and are potentially available. However, this
clearly demonstrates the explosion in includes proposed projects which have
online shopping and their market dominance. planning consent but which are not on site
At Glasgow Business Park, Hermiston and also obsolete properties. Excluding THE VACANCY OF SOME PROPERTIES WILL BE DUE
Securities is completing a 144,000 sq.ft. these, the vacancy rate is around 1% lower. TO LOCATION OR A NEED FOR IMPROVEMENT WORKS,
bespoke facility to service Amazon’s last mile Consequently, the Glasgow market does RATHER THAN A LACK OF DEMAND.
demand. The retailer also has further active not have sufficient space to satisfy current
requirements for the city and other strategic business requirements, demonstrated by
towns throughout Scotland. occupiers with requirements failing to identify
suitable premises.
RYDEN SCOTTISH PROPERTY REVIEW 2021 | 20OUTLOOK The pandemic has had positive consequences for the West of Scotland industrial property market, however its full effects on the economy may cool some of the current demand. Furthermore, the pandemic has not been good for traditional manufacturing and there is for example, a direct line between the reduction in air travel and the decision by Rolls Royce to contract at Inchinnan and lay off 700 staff. The consequences of Brexit may also lead to further contraction in the economy. However, with such a tight supply and limited new build, demand for warehousing is sufficiently robust to weather all but a severe contraction from the manufacturing sector.
TAKE UP SUPPLY
Take up of industrial property in Edinburgh The current vacancy rate is 4.9% and this
and East Central Scotland has been gradually figure has remained consistently low for the
reducing over the past few years. This is past few years. There is currently 4.61 million
largely due to diminishing supply which is not sq.ft. of industrial space available on the
being replenished rather than lack of demand. market and this figure is roughly comparable
with other years.
2020 was a particularly sporadic year with
a relatively strong start in the first quarter The quality of industrial space is variable
followed by a slow Q2 which saw only 99,730 and heavily influenced by achievable local
sq.ft. transacted during the initial pandemic rental levels. Examples of good quality
lockdown. Q3 saw a return to normal trading refurbishments are shown in the table
levels and take up in Q4 was extremely on page 23.
high, albeit this is mainly due to a couple
of large industrial property sales. An annual Small to medium multi-let industrial property
total of 913,610 sq,ft. of take up for 2020 remains extremely sought after in the
was recorded. investment market underpinned by the
resilience of occupational demand. This
While the volume of floorspace transacted has is encouraging new developments and
varied, the number of deals has been steady conversions; projects are underway across
at around 30 each quarter, again with the East Central Scotland including in West
exception of Q2. The market continues to Lothian, Falkirk and Fife.
rely on the churn of units under 5,000 sq.ft.
THE QUALITY OF INDUSTRIAL
SPACE IS VARIABLE AND HEAVILY
INFLUENCED BY ACHIEVABLE
LOCAL RENTAL LEVELS.
EDINBURGH AND
EAST OF SCOTLAND
INDUSTRIAL RYDEN SCOTTISH PROPERTY REVIEW 2021 | 22In Edinburgh there is now a significantly REFURBISHMENTS AND NEW DEVELOPMENTS
reduced industrial supply due to the increased
DEVELOPMENT DEVELOPER/LANDLORD DETAILS
demand from developers seeking higher
value uses, particularly to meet the city’s DEANS INDUSTRIAL ESTATE, MILEWAY GOOD QUALITY REFURBISHMENT OF ENTIRE
growing residential market. Bucking this trend, LIVINGSTON TERRACES
the pending purchase of Grayfield House
(7.5 acres) on Sighthill Industrial Estate by SOUTHFIELD INDUSTRIAL ESTATE, LONDON & CAMBRIDGE GOOD QUALITY ONGOING REFURBISHMENT OF UNITS
Chancerygate will be a significant step in GLENROTHES PROPERTIES
the city’s industrial market, with planning
consent being sought for over 160,000 sq.ft. BELLEKNOWES INDUSTRIAL ESTATE, RECENTLY SOLD TO GOOD QUALITY REFURBISHMENT OF UNITS
of industrial accommodation and a proportion INVERKEITHING CAISSON
of this accommodation to be built on a
speculative basis. At the closing date there BARONS COURT, EARLS GRANGE NORTHERN TRUST TEN NEW-BUILD UNITS TOTALLING 18,247 SQ.FT.
were 14 offers received for this site, of which BUSINESS PARK GRANGEMOUTH IN UNITS FROM 1,095 - 2,210 SQ.FT.
13 were from willing industrial developers,
which is a very encouraging sign for the LIVINGSTON TRADE PARK, CHANCERYGATE EIGHT NEW BUILD TRADE COUNTER UNITS FROM
market going forward. LIVINGSTON DEVELOPED AND 3,582 - 10,282 SQ.FT.
RECENTLY SOLD TO
Rental levels are gradually increasing as NORTHWOOD INVESTORS
landlords continue to improve existing stock.
There is however still a large gap between QUEENSWAY INDUSTRIAL ESTATE, FIFE COUNCIL NINE NEW BUSINESS UNITS FROM 1,044 - 2,131 SQ.FT,
rents in prime and secondary locations GLENROTHES, FIFE PART OF FIFE’S INDUSTRIAL INNOVATION INVESTMENT
suggesting that there is scope for rents PROGRAMME. COMPLETION SPRING 2021
to continue to increase on average.
ICON BUSINESS PARK, LIVINGSTON PRIVATE DEVELOPER SUBDIVISION OF INDUSTRIAL FACILITY INTO 11 UNITS
Prime industrial rents remain at £9 - £9.50 RANGING FROM C. 1,000 - 2,000 SQ.FT.
per sq.ft. and are likely to remain at that level
ABBOTSFORD BUSINESS PARK, SPRINGFIELD REAL ESTATE 10 NEW INDUSTRIAL UNITS RANGING FROM 1,000 -
until a new development sets the benchmark.
BANKSIDE INDUSTRIAL ESTATE, 1,500 SQ.FT. CURRENTLY UNDER CONSTRUCTION
These levels are typically within Edinburgh,
FALKIRK
although prominent, good quality trade counter
units can achieve rents in excess of £10 per SEVEN HILLS BUSINESS PARK, UBS ASSET MANAGEMENT CONTINUES TO OFFER THE BEST QUALITY
sq.ft. regardless of location. EDINBURGH ACCOMMODATION WITHIN THE CITY, BEING ONE OF
THE ONLY NEW BUILD INDUSTRIAL DEVELOPMENTS
TO COMPLETE IN RECENT YEARS
TURNHOUSE COURT, 1-14 NORTHERN TRUST PHASE 1 UNDER CONSTRUCTION TOTALS 28,413 SQ.FT.
BROWNRIGG YARDS/CLIFTONHALL IN 14 UNITS FROM 1,045 SQ.FT. THE SECOND PHASE
ROAD, NEWBRIDGE WILL COMPRISE 47,909 SQ.FT.
RYDEN SCOTTISH PROPERTY REVIEW 2021 | 23DEALS OUTLOOK
East Central Scotland is delivering increased
ADDRESS SIZE (SQ.FT) OCCUPIER SECTOR
demand for available industrial units, steady
12 DUNNET WAY, BROXBURN 91,804 CAPITAL COOLING REFRIGERATION rents and perhaps growth, and a significant
increase in investment values due to the
GRANGE ROAD, HOUSTOUN INDUSTRIAL ESTATE, 65,992 MCLAREN PACKAGING PACKAGING sheer weight of money seeking access
LIVINGSTON to the sector. Market fundamentals of low
voids, high conversion rates and a strong
22 HOUSTOUN ROAD, HOUSTOUN INDUSTRIAL 32,077 DRUMMOND DISTRIBUTION LOGISTICS land market continue to characterise and
ESTATE, LIVINGSTON underpin the market.
OAKBANK PARK ROAD, LIVINGSTON 32,222 VALNEVA SCOTLAND LTD MANUFACTURING For 2021, the general level of rents across
the region is expected to be maintained and
6 HUTTON SQUARE, BRUCEFIELD, LIVINGSTON 12,346 SPRING ENGINEERING ENGINEERING indeed increased where proactive landlords
SERVICES refurbish vacant properties. This applies
in particular to the wider region where the
UNITS 1 & 2, QUEEN ANNE DRIVE, NEWBRIDGE 21,950 THE ALTERNATIVE LOGISTICS majority of existing stock is now over 40 years
PARCELS COMPANY LTD old and presenting significant challenges to
modern occupiers seeking quality buildings,
ideally with good sustainability credentials.
FOR 2021, THE GENERAL LEVEL
OF RENTS ACROSS THE REGION
IS EXPECTED TO BE MAINTAINED
AND INDEED INCREASED
WHERE PROACTIVE LANDLORDS
REFURBISH VACANT PROPERTIES.
RYDEN SCOTTISH PROPERTY REVIEW 2021 | 24INDUSTRIAL
ABERDEEN
TAKE UP As expected the vast majority of deals DEALS
The industrial property market in Aberdeen related to the oil and gas industry, although in
ADDRESS SIZE (SQ.FT.) OCCUPIER SECTOR
faced a unique mix of challenges in 2020 line with distribution sector market trends in
due to COVID-19, the associated lockdown Central Scotland notable deals also included a BIRCHMOSS BUSINESS 72,500 SCHLUMBERGER OIL AND GAS
restrictions and a fall in the oil price. Despite 47,000 sq.ft. letting to Fedex/TNT at Aberdeen PARK, ECHT
these market conditions, annual take up One and a site leased to Amazon at Cairnrobin
totalled 720,780 sq.ft. which was a 2% Business Park where they built out their own M1 & M2, MINTO DRIVE, 52,723 GRAMPIAN LOGISTICS
increase on 2019 and fully 10% above premises totalling 52,463 sq.ft. The largest ALTENS CONTINENTAL LTD
the 5-year average of 652,500 sq.ft. deal was Schlumberger investing at Birchmoss (PURCHASE)
Business Park in Echt where the landlord
The 72 lettings in 2020 was a fall from 2019’s tabled very competitive rental terms so that PLOT 1, CAIRNROBIN 52,463 AMAZON (UK) FULFILMENT
total of 91, however the average deal size rose the company did not renew leases with their BUSINESS PARK, SERVICES LTD
from 7,799 sq.ft. to 10,010 sq.ft. Particularly existing landlords. PORTLETHEN
notable were the 25 deals larger than 10,000
sq.ft. in 2020, which was a 38% increase on FORMER RICHARD 47,710 AGD DUFF & FOOD AND
2019’s total. IRVIN HOUSE, PARTNERS FISH DRINK
HARENESS ROAD, MERCHANT
ALTENS (PURCHASE)
UNIT 1, ABERDEEN 47,000 FEDEX/TNT LOGISTICS
ONE, CRAWPEEL ROAD,
ALTENS
HARENESS ROAD, 29,082 OPTIMA SOLUTIONS OIL AND GAS
ALTENS (UK) LTD
RYDEN SCOTTISH PROPERTY REVIEW 2021 | 25SUPPLY While there is underlying demand for such due to the higher holding costs for vacant
Industrial property supply in Aberdeen new build facilities in Aberdeen, speculative buildings as the empty rates relief for industrial
has increased from 2.86 million sq.ft. development has been limited to new build buildings no longer exists. Consequently,
to 2.95 million sq.ft. However, occupiers are terraces of small industrial units of around landlords are being more flexible on lettings
increasingly gravitating to new build properties 1,000 - 2,500 sq.ft. Until the oil industry and lease renewals of second hand stock.
and less than 100,000 sq.ft. of the current recovers and certainty returns to the market This will continue until a significant proportion AS THE SUPPLY HAS INCREASED
supply meets the criteria, indicating critically occupiers are reluctant to commit to lease of the existing supply is soaked up. To remain SIGNIFICANTLY IN RECENT YEARS
low supply. lengths in excess of 5 years. competitive in this market landlords are also THE GAP BETWEEN NEW BUILD
having to refurbish vacant buildings in order to
AND SECOND HAND BUILDINGS
A significant proportion of the marketed stock Prime rents remain at £9 per sq.ft. for stand a chance of landing an active occupier
is towards the end of its beneficial life. This workshop space, £18 per sq.ft. for offices requirement. HAS WIDENED.
explains the large number of auction sales and £2 per sq.ft. for concrete yards. Rents for
during 2020 as landlords became frustrated second hand buildings have historically been OUTLOOK
by the holding costs of vacant property and closely behind those new build premises but As the oil and gas market recovers due
the subdued occupier demand for poorer this was due to a low level of industrial stock to a rising oil price in recent months, and
quality buildings. Developers have taken being available in the market. As the supply as lockdown restrictions are eased, it is
the opportunity to buy up long term vacant has increased significantly in recent years anticipated that occupier demand will improve
properties and sites to build out new industrial the gap between new build and second hand as increased certainty returns to Aberdeen’s
premises to meet market demand. buildings has widened. This is also partly industrial property market.
SPECULATIVE DEVELOPMENT
DEVELOPMENT DEVELOPER SIZE/ NUMBER OF UNITS DELIVERY DATE
UNITS 8, 9 & 10, KINGSHILL KNIGHT PROPERTY GROUP 3 UNITS FROM 9,580 - 12,379 CONSTRUCTION TO COMMENCE SHORTLY
COMMERCIAL PARK, WESTHILL SQ.FT.
ALTENS TRADE PARK, KNIGHT PROPERTY GROUP UNITS 1 & 2: 7,666 SQ.FT. CONSTRUCTION COMPLETE. UNITS 3, 4, 5 AND 6
SOUTERHEAD ROAD, ALTENS NOW LET
UNITS 1-15, ABZ BUSINESS PARK, ABZ DEVELOPMENTS LTD 15 UNITS OF 2,500 SQ.FT. PHASE 1 COMPLETE – UNITS 3, 8 AND 9 NOW
DYCE LET. PHASE 2 – UNDER CONSTRUCTION
9A, ABZ BUSINESS PARK, DYCE ABZ DEVELOPMENTS LTD 18,138 SQ.FT. CONSTRUCTION TO COMMENCE SHORTLY
SALTIRE BUSINESS PARK, SALTIRE DEVELOPMENTS 7 UNITS TOTALLING 13,146 CONSTRUCTION COMPLETE
BADENTOY, PORTLETHEN SQ.FT.
THE CRESCENT, WESTHILL KNIGHT PROPERTY GROUP 4 UNITS FROM 2,750 - 3,520 CONSTRUCTION DUE TO COMPLETE FEBRUARY
SQ.FT. 2021. UNITS 1, 2 AND 3 ARE UNDER OFFER
THAINSTONE BUSINESS PARK, ANM GROUP/ GSS 6 UNITS FROM 1,496 - 5,528 CONSTRUCTION TO COMMENCE SHORTLY
INVERURIE DEVELOPMENTS SQ.FT.
CITY SOUTH BUSINESS PARK DANDARA 8 UNITS FROM 1,500 - 2,250 PHASE 2 DUE TO COMPLETE END OF APRIL/
SQ.FT. EARLY MAY 2021
RYDEN SCOTTISH PROPERTY REVIEW 2021 | 26According to the Scottish At a UK level, the Office for National Statistics
reports that consumer expenditure under
DEMAND
In this context, the physical retail market is
Those occupiers who have sustained their
business through lockdowns are looking ahead
Retail Consortium & the current lockdown is 35% below its pre- contracting through branch closures, CVA’s with sustainable models for the post-COVID-19
crisis level. Social expenditure on leisure (Company Voluntary Arrangements), pre-pack world. Sectors looking to expand their physical
KPMG, in December 2020 activities is down by 55%. administrations and acquisitions. Notable presence include convenience stores, food
losses include Monsoon/Accessorize, M&Co, stores, discounters and drive-thru operators.
total sales were 16.6% The effects on the retail and leisure market Edinburgh Woollen Mill, Quiz, Hotter Shoes, There is a distinct bias towards out of town,
lower than in December are profound and continuing. Convenience
retailers have benefitted from their essential
Arcadia, Paperchase, Oak Furnitureland and
Poundstretcher. Other occupiers such as
roadside or community locations, with city
centres proving to be a continuing challenge.
2019. Food sales were up status during lockdowns, the provision of TM Lewin have abandoned the High Street
staple goods and for many a multichannel in favour of online only sales. A major market inflection is signalled by the
by 3.3% but non-food fell offer which includes online click-and-collect acquisitions of Debenhams by Boohoo but
by more than a third due and deliveries. Comparison retailers with
strong multichannel businesses fared best
New store openings by national multiples
mainly involved essential and discount/value-
without the physical stores, and of the Top
Shop, Topman, HIIT and Miss Selfridge brands
to the well-documented among their peer group, but against a
backcloth of closures during lockdown and a
oriented retailers. Meanwhile, store closures
were led by fashion brands and retailers reliant
and stock by Asos, again excluding the shops.
These are wholesale moves from physical
impacts of lockdowns. generational switch to online shopping. This on city centre footfall after office workers and shops to established, successful online
sudden rise in online spending has accelerated tourists disappeared from the streets. CoStar’s retailing platforms.
the long run trend of retail concentration into data shows that for every letting signed last
the largest destinations. Restrictions have year, three shops were put up for lease. Rebasing of rents for physical stores is
had the greatest impact across the leisure increasingly common, with some occupiers
sector, although some restaurant operators Those sectors hit hardest are clothing & insisting upon a turnover only arrangement
have shifted to home deliveries through footwear, health & beauty, homewares and DIY due to the uncertainty of cashflow. This may
intermediaries such as Just Eat and Deliveroo. during lockdowns. Those least affected are accelerate the inevitable changes to lease
(digital) entertainment and convenience stores. terms to allow for more flexibility over lease
length and rental payments. Significant
downward pressure on rental values is
expected, on the basis there will be limited city
centre requirements for additional stores and
an increasing supply over the coming months.
RETAIL AND THE EFFECTS ON THE RETAIL AND
LEISURE MARKET ARE PROFOUND
LEISURE
AND CONTINUING.
RYDEN SCOTTISH PROPERTY REVIEW 2021 | 27This oversupply of retail floorspace within Russell & Bromley, Miele and JD Sports.
town and city centres will accelerate the need Other lettings include Bonnie and Wild food
for a response. The SRC reported for Q3 2020 court, Salerno Pizza, Bross Bagels and Lane7,
that 1 in every 7 shops across Scotland was a boutique bowling and gaming operator.
vacant. This excludes more recent closures
and store-free acquisitions noted above, and Costa has opened a new drive-thru at
does not yet include shops currently closed by Hermiston Gait Retail Park on the outskirts
lockdown which may yet fail to re-open. of Edinburgh and has further sites planned for
Scotland, including at Cumbernauld, as part of
DEVELOPMENT a 60-site UK expansion. Similarly, Starbucks
Exacerbating this challenge at a local level, is opening two drive-thru’s in Inverness,
many service business such as banks and along with sites at Rutherglen, Paisley, J24
travel agents were already migrating away Retail Park and Forge Retail Park in Glasgow,
from physical branches to mainly or entirely Westhill in Aberdeen and Inveralmond in Perth.
online. As is now widely acknowledged
and underway, this will demand radical Hermiston Gait Retail Park has also attracted
changes to the mix of commercial, community a new Aldi store. The discount retailer in
and employment uses in town centres. addition has a further three stores planned in
2021 for J24 Retail Park, Govan; Portlethen
In respect of new developments, Glasgow’s Retail Park, Aberdeen; and Thornybank
St Enoch’s Shopping Centre is well underway Industrial Estate, Dalkeith.
with redevelopment to accommodate a new
9-screen Vue Cinema together with new OUTLOOK
RETAIL INDEX (TOP 20 TOWNS) restaurant operators including Nando’s, New store requirements continue from
110 Smashburger, Cosmo, Delhi Darbar and Home Bargains, B&M, Aldi, Lidl and drive-
105 Donut King. thru fast food and coffee operators. Many
retailers will invest heavily to ensure that
100
In Edinburgh, St James Quarter’s new centre their physical stores interact with their online
95 providing 85 shops, 30 restaurants, 2 hotels activities to offer the shopper a full experience
90
and a cinema is due to open around Easter and a reason to visit. Set against those
2021. Retailers include the existing John success stories is the requirement for a
85
Lewis Partnership, Next, H&M and Zara, along major reshaping of the many town and city
80 with more recent announcements by Peloton, centres afflicted by long term and increasing
2016 2017 2018 2019 2020
Tommy Hilfiger, Calvin Klein, Dune, Mango, shop vacancies.
Retail index CPI
DEALS
ADDRESS SIZE (SQ.FT.) OCCUPIER SECTOR
160 BUCHANAN STREET, GLASGOW 1,700 TIMBERLAND FOOTWEAR
BUCHANAN GALLERIES, GLASGOW 1,200 RADLEY HANDBAGS
ST JAMES, EDINBURGH 2,600 TOMMY HILFIGER LIFESTYLE BRAND
1,000 JD SPORTS SPORTS GOODS
1,700 GOLDSMITHS JEWELLER
TRINITY CENTRE, ABERDEEN 1,121 MOSTYN MCKENZIE FOOTWEAR
RYDEN SCOTTISH PROPERTY REVIEW 2021 | 28You can also read
