SCOTTISH PROPERTY REVIEW 2022 - Ryden
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SCOTTISH PROPERTY REVIEW 2022
3 SUMMARY AND OUTLOOK 4 ECONOMY 6 PLANNING 9 RESIDENTIAL DEVELOPMENT 13 OFFICES 21 INDUSTRIAL 30 RETAIL AND LEISURE 33 INVESTMENT CONTENTS RYDEN SCOTTISH PROPERTY REVIEW 2022 | 2
SCOTLAND IS City office markets staged a is holding steady with some property, city centre trophy office
recovery in 2021 in Glasgow and potential for an uptick. buildings and retail warehousing
EASING OUT OF particularly in Edinburgh, although tilted towards essential goods.
Increased retail spending is
THE LAST OF THE Aberdeen has yet to fully pick
a rebound rather than growth,
Glasgow and Edinburgh were
TIERED PROTECTION up again. Occupiers recognise favoured, while activity in Aberdeen
and the physical retail market
the likely endurance of agile increased significantly as some
RESTRICTIONS working post-pandemic and are
continues to consolidate and
investors sought out value
restructure. Floorspace contraction
ASSOCIATED WITH THE adjusting their space requirements
and the imperative for mixed-use
opportunities. The wall of money
COVID-19 PANDEMIC. accordingly, but notwithstanding targeting property – including
regeneration has spread from
this shift are active in the market active overseas investors – and
While economic output and laser focused on top quality
smaller towns to larger, formerly
the lifting of pandemic restrictions
important shopping destinations
is once again around space, ESG credentials and
and indeed to parts of city centres.
are expected to sustain market
future flexibility. activity during 2022.
pre-pandemic levels, Comparison retailing no longer
the societal and economic The industrial property market necessarily means a visit to the Residential development decreased
shrugged off the twin challenges shops but is done online and at during the pandemic but overall
changes brought by of Brexit and the pandemic, and home too. Meanwhile, discounters, sales and prices accelerated. The
the pandemic have indeed found some opportunity in food and drive thru operators are development land market is strong
accelerated trends each. Steady demand growth and trading well and expanding. although prices are partly balanced
the relentless ageing of the existing out by rising build costs. The Build-
within some property Property investment accelerated
industrial stock should drive positive to-Rent sector is now on-site with
during the latter half of 2021
market sectors. activity across Central Scotland
as investors re-entered the
a strong pipeline.
into at least the medium term. DR MARK ROBERTSON
market, particularly for industrial
The Aberdeen industrial market MANAGING PARTNER
SUMMARY
AND OUTLOOK RYDEN SCOTTISH PROPERTY REVIEW 2022 | 3
ECONOMY
GROWTH EMPLOYMENT
During the third quarter of 2021 Scotland’s Scotland’s unemployment numbers for the
economy grew by 1.0%. Output grew in the three months to November 2021 fell by 21,000
services sector (2.1%), but fell in the production to stand at 100,000. This is equivalent to an
(-3.1%) and construction (-1.5%) sectors. This unemployment rate of 3.6%, which is below
quarterly growth represented a significant the level recorded before the COVID-19
slowing over the 5.6% which had been pandemic started. The rate is down by 0.8%
recorded in Q2 2021. on the previous three months and is below
the UK rate of 4.1%. Scotland’s overall
A more recent, provisional monthly estimate employment rate of 75.1% was however
for November 2021 suggested that output in slightly below the UK figure of 75.5%.
that month grew by 0.8%. Provisional GDP in
November was 0.6% above the level recorded The furlough scheme ended in September
in February 2020 immediately before the 2021. Given that an estimated one-third of jobs
pandemic struck, meaning that all of the slump in Scotland were supported by this scheme
in output recorded following the first lockdown the initial labour market signs following its
in March 2020 has now been recovered. In expiry are positive. Across the country there
November 2021 output in the services sector were however notable job losses in the energy
– which accounts for three-quarters of the sector, retail and leisure sectors, and across
GDP GROWTH COMPARED TO LAST QUARTER (%)
Scottish economy – grew by 0.5%, production wider sectors including manufacturing and
grew by 1.7% and construction grew by 3.6%. engineering, and financial services. Job gains 20
Output within the service sector varied with were recorded in the technology sector, life
consumer and public services broadly flat but sciences sector, renewable energy sector
other services growing at an estimated 0.9%. and COVID-19 related employment.
15
10
%
5
0
Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021
-5
Source: Scottish Government
RYDEN SCOTTISH PROPERTY REVIEW 2022 | 4
OUTLOOK Residential development decreased during
The RBS Purchasing Managers’ Index the pandemic but overall sales and prices
for December 2021 showed an increase in are partly balanced out by rising build costs.
Scottish business activity to 52.7. A reading The Build-to-Rent sector is now on-site with a
of above 50 signals net growth, however strong build pipeline.
the Index was below the 55.9 recorded in
November 2021 and was the weakest figure There is no doubt that the series of lockdowns
for 10 months. The dip in November may and tiered protection restrictions over the past
have been due to concerns over the economic 22 months have delayed the restoration of
impacts of the Omicron variant which have previous levels of economic activity, however
since abated. the final phase of re-growth has happened
quite quickly. Scotland’s property markets
Fraser of Allander Institute offers positive are now following this clear path to recovery, SCOTLAND’S PROPERTY
forecasts for economic growth in Scotland. although there continues to be substantial MARKETS ARE NOW FOLLOWING
While noting the effects of the Omicron variant, variation by market sector due to the specific THIS CLEAR PATH TO RECOVERY,
as well as cost pressures and supply chain impacts of the pandemic in accelerating trends
ALTHOUGH THERE CONTINUES
disruptions, the Institute estimates that growth and also its lagged effects, for example on
in 2021 was 6.4% and forecasts 4.7% growth vacancy rates. TO BE SUBSTANTIAL VARIATION
for 2022. The Scottish Fiscal Commission BY MARKET SECTOR.
expects GDP to return to pre-pandemic levels
during Q2 2022.
RETURN TO PRE-PANDEMIC GDP REVISED SINCE LAST BUDGET
120
100
Index of GDP
80
60
Q4 2019 Q2 2022 Q4 2023
Forecast GDP Jan 21 Forecast GDP Dec 21
Source : Scottish Fiscal Commission
RYDEN SCOTTISH PROPERTY REVIEW 2022 | 5
PLANNING
NATIONAL PLANNING NPF4 sets out the Scottish Government’s
54.8 WEEKS
priorities and policies for the planning system
FRAMEWORK NPF4 up to 2045, including an approach to achieve Major housing applications
net zero carbon emissions by that date. on average*
For the first time it incorporates Scottish
A draft of the long- Planning Policy (SPP) and the NPF into
a single document.
awaited National Planning
Framework 4 (NPF4) has Significantly it will have legislative clout and
will form part of the Statutory Development
10 41.3
recently been published by Plan upon its adoption. It is therefore a
very important planning policy tool that will
the Scottish Government. inform decision makers assessing individual
planning applications.
Given the ongoing climate emergency, it is
unsurprising that the environment, biodiversity WEEKS WEEKS
and climate change are key themes, alongside
meeting the needs of communities and an Average decision time Major Development planning
emphasis on everything local. for Local Development decisions were quicker
planning decisions on average
NPF4 aims to deliver change and provide
founding context in determining planning
applications. This could possibly lead to
more weight being attributed to general
principles by reporters at appeal, or the
NPF could simply be a point of reference...
272
‘notwithstanding which the Local Development
Plan Policy states...’
DECISIONS
Total number of Major
Development decisions
*Figures exclude major applications subject
to processing agreements where timescales
for decisions are agreed in advance.
RYDEN SCOTTISH PROPERTY REVIEW 2022 | 6
Some of NPF4’s key messages of interest
to developers and investors include:
• The renewed attempt to re-inforce the Other wider policy initiatives in the draft include • An update of the Scottish Government’s
development plan system and limit the requirements for: six qualities of successful places: designed
scope for departures. for lifelong health and wellbeing; safe and
• Spatial strategies, which will presumably pleasant; well-connected and easy to move
• The stated aim of increasing the density inform the Regional Spatial Strategies that around; distinctive; sustainable (including
of development in settlements. all local planning authorities have to produce support of net zero carbon); and adaptable.
in accordance with the Planning (Scotland)
• The related tightening up on green belt/ Act 2019. • Recognition of the mitigation hierarchy
greenfield development and more pressure (i.e. the order in which the impacts of
to demonstrate consideration of brownfield • A centralised approach dictating the development should be considered and
sites first. housing land requirements for each addressed) and that development proposals
planning authority in Scotland, with just should provide significant biodiversity
• Minimum all-tenure housing land over 200,000 new homes forecast to be enhancements.
requirements that in instances have largely required nationwide over the next 10 years.
been reduced in line with local planning The housing land requirements will also • All planning applications will need to
authority submissions. be set for the following 10 years. demonstrate how they help meet net zero
carbon emissions by 2045 – although details
• The requirement for a programmed housing • Renewed emphasis that urban expansion on how this consideration will be applied
supply pipeline. should be limited where brownfield, vacant are limited.
and derelict land and buildings can be used.
• Increased requirements for ‘adaptability’ It is also recognised that brownfield sites can • Development planning should be
of housing. make contributions to restoring biodiversity. ‘infrastructure first’ in that local development
plans must clearly set out infrastructure
• Affordable housing requirements to be • Renewed support of a place-based requirements, the evidence base for those
‘at least 25%’ and more where justified approach to design, and support for the requirements, and indicate required developer
(lower amounts also need to be justified). 20-minute neighbourhood, housing land contributions. This will fuel more debate on
allocated an ‘infrastructure first’ basis. contributions being commensurate in scale
• A requirement for a ‘statement of community and kind and on development land tax.
benefit’ on proposals of 50+ housing units. • A renewed emphasis on creating sustainable
places that are liveable, productive and
• ‘Houses on land not identified for distinctive.
housebuilding should not be supported’.
RYDEN SCOTTISH PROPERTY REVIEW 2022 | 7
• An emphasis on the need for blue and green The proposed NPF4 has been met with mixed It adds little to previous policy guidance but
infrastructure with local development plans responses. Is this another once in a lifetime the top down direction of local housing land
required to identify and protect this including chance for change? Or simply some well targets and potential standardisation of LDP
provision for new or improved access to play aligned policy narrative but light on actual policies may further erode local distinct and
and outdoor sports opportunities. delivery detail? bespoke solutions that are required to deliver THE PLANNING SYSTEM REMAINS
investment and growth. A LARGELY PRESCRIPTIVE AND
• Reducing the need for unsustainable There will be many proposals that gain support REGULATORY SYSTEM OF CONTROL
travel, in that local development plans must from policy principles at national level but That combined with allocations based on eggs THAT PRESCRIBES THE REASONS
prioritise allocations to areas that can be fall foul of local circumstances, local policies in fewer larger baskets will reduce local and
AND JUSTIFICATIONS FOR NOT
accessed by public transport or active travel. and local politics. There will continue to be regional developer activity and competition
Strong emphasis that developments which a tension between a top down government at the point of sale through choice and quality DOING OR APPROVING SOMETHING.
encourage reliance on the private car should approach vs empowering community planning of design as well as price. All corners of all
not be supported. and local policy responses. camps have recognised for well over two
decades that there is a housing crisis – we
• Stronger recognition of irreplaceable Some ministers and some practitioners need to build more homes that are affordable
habitats with new protections outlined, might have hoped for more direction and and accessible – yet the system constrains
such as for ancient woodland. focus on delivery and grasping the nettle supply, drip feeds the market and house prices
of infrastructure delivery which continues (current and new stock) are climbing to new
• Stronger support for wind farm to be the major obstacle to strategic growth. record levels.
developments, small scale renewables, Discussion and consultation will follow
solar energy developments and carbon on Development Tax. All of this sits in a COVID-19 vacuum where
capture/negative emissions developments. trends have been accelerated or exacerbated:
The proposed NPF4 falls short of a paradigm the decline of the high street, re-imagining
• Identification of 18 National Developments shift that promotes and shapes development shopping centres and what a town centre
across Scotland – which include very in a way that is more closely aligned to should be and more flexible forms of living
different scales and forms of development, market needs (not wants). The planning and working for the next generation.
some previously identified that survive and system remains a largely prescriptive and
others no longer listed despite not being regulatory system of control that prescribes Alongside parliamentary review of NPF4,
fully delivered. the reasons and justifications for not doing the Scottish Government is running a public
or approving something. consultation on the draft, which is open for
comments until 31st March 2022.
RYDEN SCOTTISH PROPERTY REVIEW 2022 | 8
RESIDENTIAL
DEVELOPMENT
DEVELOPMENT This disparity between demand for and supply HOUSE PRICES
Delayed data makes clear the effects of the of new homes helps to explain why average 300,000
pandemic on the new build residential market sale prices increased by 25% between
250,000
in Scotland. A total of 14,834 all-sector new September 2020 and September 2021, from
build homes were completed in the year £219,000 to £274,000. The 5-year increase 200,000
Price (£)
ending 2020, which was a decrease of 32% in new build average sale prices is 47% with 150,000
compared with 2019. The number of new build the majority of this increase occurring since
100,000
homes which started construction across all the start of the pandemic.
sectors was 17,883 which was a decrease 50,000
of 27%. These figures need to be considered The detached family home market has seen
0
in the context of the industry view that 25,000 the highest percentage growth in house prices Sep 16 Mar 16 Sep 17 Mar 17 Sep 18 Mar 18 Sep 19 Mar 19 Sep 20 Mar 20 Sep 21
new homes are required each year to meet in the 12 month period ending September Average price New build Average price Existing properties
need and demand. During 2021, new build 2021, outperforming flats, terraced and semi-
Source: HM Land Registry
sales transactions returned to pre-pandemic detached properties. This will no doubt have
levels showing an increase of 18% on the been caused in large part by families looking
previous year. to up-size. SALES VOLUME NEW BUILD
1,600
Sales volumes for new build properties 1,200
have remained broadly static at around
1,000
1,000 per month with peaks (March 2021) Number
800
and troughs (January 2021) coinciding both
with normal market cycles and with enforced 600
COVID-19 lockdowns. 400
200
0
Sep 20 Oct 20 Nov 20 Dec 20 Jan 21 Feb 21 Mar 21 Apr 21 May 21 Jun 21 Jul 21 Aug 21 Sep 21
Source: HM Land Registry
RYDEN SCOTTISH PROPERTY REVIEW 2022 | 9
LAND MARKET such as Aberdeen oversupply continues to
The residential development land market dampen developer demand. The interest
continues to perform well. A dip in activity at from BTR (Build To Rent) developers and
the beginning of the pandemic subsided within investors for well-located urban brownfield
a matter of months. Demand for new sites from sites continues to increase. Further expansion
the volume and mid-tier housing developers of this sector into more suburban locations
remains strong as unit sales rates per month capable of providing single family homes
continue to increase in many parts of the for rent is a natural evolution.
country. These positive market conditions and
current levels of under supply are encouraging The combination of increased developer
developers to look at acquiring larger sites and confidence and constrained land supply
to consider sites in what might have previously would normally push up land values, were
been regarded as peripheral locations. it not for the significant increase in build
costs which are, in part, balancing out the
Due to homeowners adapting their housing increase in house sale prices. Accordingly,
needs for greater living and outdoor space, greenfield values for family housing have
the detached home sector of the land market risen only modestly. The highest values per
continues to perform strongly across cities net developable acre remain in and around
and larger towns. Land in urban locations Edinburgh at £1.25 to £2.25 million, in Glasgow
more suited to apartment living also continues £0.5 to £1.0 million and in Aberdeen £0.5
to attract developer interest in cities such as to £0.8 million. These greenfield rates apply
Glasgow and Edinburgh as well as affluent to larger sites with the capacity for in excess
suburban towns, although in other locations of 50 units.
RYDEN SCOTTISH PROPERTY REVIEW 2022 | 10BUILD TO RENT (BTR)
BTR DEVELOPMENT DETAILS
The private rental market across both
Glasgow and Edinburgh continues to flourish, GRANARY QUAY, DEVELOPMENT BY DANDARA OF 342 UNITS WITH ANTICIPATED COMPLETION IN LATE 2022
with tenant demand remaining strong. The GLASGOW HARBOUR
underlying issues remain the lack of supply
and the quality of stock that is available. HOLLAND PARK, PITT STREET, THE 433 UNIT DEVELOPMENT BY MODA LIVING HAS AN ANTICIPATED COMPLETION IN
Private landlords are being squeezed by new GLASGOW LATE 2023
tax legislation which has resulted in a number
leaving the market. The supply and demand CANDLERIGGS SQUARE, IN NOVEMBER 2021 CONSTRUCTION COMMENCED ON 346 UNITS BY DRUM PROPERTY
imbalance has led to double digit annual GLASGOW GROUP AND STAMFORD PROPERTY INVESTMENTS, COMPLETION ANTICIPATED LATE 2023.
rental growth in Glasgow of 15.0% and above-
average 9.8% in Edinburgh (source: Citylets). BUCHANAN WHARF, DEVELOPMENT OF 324 UNITS BY DRUM PROPERTY GROUP, FUNDED BY LEGAL & GENERAL,
GLASGOW IS DUE TO COMPLETE DURING 2022.
Furthermore, and illustrating the intense
competition for rental accommodation, CENTRAL QUAY, 498 UNIT DEVELOPMENT BY PLATFORM_ IS CURRENTLY UNDER CONSTRUCTION
according to Citylets the average time to GLASGOW
let in Glasgow was just 9 days, down from
20 days a year ago while the average in G3 SQUARE, DEVELOPMENT BY DRUM PROPERTY GROUP HAS BEEN FORWARD FUNDED BY EDMOND DE
Edinburgh was 11 days, down from 33 days. GLASGOW ROTHSCHILD REAL ESTATE INVESTMENT MANAGEMENT’S AND WILL COMPRISE 114 UNITS.
CONSTRUCTION IS DUE TO COMMENCE IMMINENTLY
Despite these market conditions, delivery of
good quality rental accommodation via new SPRINGSIDE, PHASE 1 OF THE 476 UNIT DEVELOPMENT BY MODA LIVING IS UNDER CONSTRUCTION
BTR developments remains slow. Although EDINBURGH
a target location for institutional investment,
BONNINGTON ROAD LANE, DEVELOPMENT OF 453 UNITS BY PLATFORM_ IS UNDER CONSTRUCTION
Edinburgh and Glasgow have lagged behind
EDINBURGH
other major regions in the UK, particularly with
regard to operational BTR units – In Edinburgh,
IONA STREET, WATKIN JONES SCHEME HAS BEEN FORWARD FUNDED BY VITA GROUP. THE DEVELOPMENT
only 7% of BTR stock (including pipeline) is
EDINBURGH WILL INCLUDE 60 BTR UNITS AND 205 STUDENT HOMES. ANTICIPATED START DATE OF Q1 2022
operational. The total pipeline is now 3,985
units in Glasgow and 3,519 units in Edinburgh ASHLEY PLACE, BONNINGTON, DEVELOPMENT OF 65 BTR UNITS BY GLENCAIRN PROPERTIES HAS AN ANTICIPATED START
across 18 developments. EDINBURGH DATE OF Q2 2022
In Edinburgh, Moda Living is now nearing FREER STREET, VASTINT ARE ON SITE, THE HOTEL AND OFFICE ARE NOW COMPLETED, A SITE START FOR
completion of Phase 1 of Springside; EDINBURGH 253 BTR UNITS IS ANTICIPATED IN 2022
initial take up has been extremely positive,
achieving the February 2022 take up target
by December 2021.
Further BTR developments are under
construction (see table).
Rapidly rising construction costs are creating
viability issues for developers, however, strong
rental growth and increased investor appetite
for the residential sector, may go some way
to offset cost inflation.
RYDEN SCOTTISH PROPERTY REVIEW 2022 | 11BTR OUTLOOK
Fundamental demand and supply
imbalances in the residential sector, for
both sale and letting, underpin positive
market prospects. Construction costs
and supply chain issues remain a concern
although some commentators are suggesting
stability will return in the second half of 2022.
Planning delays and uncertainty continue
to hinder the market’s ability to meet buyer
and tenant demand.
Buchanan Wharf BTR Development. Source: Drum/Alastair LeithDEMAND As demonstrated by the full year office take PRIME OFFICE RENTS
Glasgow city centre office take up for 2021 up, demand for the best new space in the city 40
totalled 524,230 sq.ft. comprising 99 deals. centre has bounced back with a clear signal
35
Despite the ongoing pandemic this was a that occupiers are planning ahead and seeking
notable 51% increase from 2020. The 5 year to provide an exceptional ESG (Environmental, 30
average office take up for the city centre Social, and Governance) focused working
25
is now 751,900 sq.ft. environment that attracts staff back to the
£ per sq ft
workplace post-pandemic. 20
A significant element of this activity was in
the Grade A sector, accounting for 42% of the There continues to be healthy demand for 15
total in eight deals. This included a number of highest quality offices with further space 10
occupiers acquiring space who had previously currently under offer. This trend is anticipated
paused relocations as a result of the sudden to accelerate as the market begins to move 5
impact of the pandemic. All three of the new out of the pandemic. 0
build offices under construction in the city 2017 2018 2019 2020 2021 2022
centre secured pre-lets, along with Building The smaller indigenous/SME market remains (projected)
Glasgow Edinburgh Aberdeen
6 at Buchanan Wharf. fragile with many occupiers still weathering
some elements of the COVID-19 fallout or
Approximately 59% of the take up was secured unable to predict future workplace strategy. CITY CENTRE DEALS
in buildings with floor plates in excess of Some of these occupiers have taken short ADDRESS SIZE OCCUPIER SECTOR
10,000 sq.ft. term, flexible interim solutions or grasped the (SQ.FT.)
opportunity to re-gear their lease on a more
A new headline rental for the city centre flexible basis. BUILDING 6, BUCHANAN 75,000 STUDENT LOANS GOVERNMENT
has now been achieved at £35.25 per sq.ft. WHARF (PRE-LET) COMPANY
(at 177 Bothwell Street).
3RD AND 4TH FLOORS 48,870 TRANSPORT GOVERNMENT
177 BOTHWELL STREET* (PRE-LET) SCOTLAND
GROUND & 1ST FLOOR 35,787 DWP GOVERNMENT
200 RENFIELD STREET
5TH (PART) & 6TH FLOORS 20,739 ATKINS ENGINEERING
2 ATLANTIC SQUARE
1ST FLOOR 20,676 BNP PARIBAS BANKING
OFFICES
177 BOTHWELL STREET* (PRE-LET)
2ND FLOOR 19,028 AECOM ENGINEERING
177 BOTHWELL STREET* (PRE-LET)
*It should be noted that to accommodate these lettings, the landlord HFD is no longer delivering their own Business Centre
(Opus) which has previously been reported in take up figures.
GLASGOW RYDEN SCOTTISH PROPERTY REVIEW 2022 | 13SUPPLY 2021 witnessed two significant acquisitions CITY CENTRE NEW BUILDS
The erosion of Glasgow’s city centre prime on Bothwell Street: Orion Capital Managers’
ADDRESS SIZE ESTIMATED DEVELOPER
Grade A office supply is now being replenished purchase of 50 Bothwell Street and Forma
(SQ.FT.) DELIVERY
by the completion of two out of the three Real Estate’s acquisition of Aurora, 120
(AVAILABLE) DATE
new build offices under construction. The Bothwell Street – both will be targeting the
remaining building, 177 Bothwell Street, is due delivery of exceptional refurbished space. 2 ATLANTIC SQUARE 96,650 Q3 2021 BAM PROPERTIES/
for completion in early 2022 and has already The pipeline of notable refurbishment projects (69,474) (COMPLETED) TAYLOR CLARK
attracted pre-lets during construction as shown is listed in the table.
in the table on page 13. CADWORKS 94,431 Q4 2021 FORE PARTNERSHIP
The total vacancy for the city centre is in the (84,345) (COMPLETED)
There are no further speculative new build order of 1.35 million sq.ft. (c. 6% vacancy rate),
offices on site, albeit all eyes are on The up from 1.042 million sq.ft. in 2020. 177 BOTHWELL STREET 305,000 Q1 2022 HFD
Grid site at 33 Cadogan Street which sold (30,764)
before Christmas after strong bidding. New
owners, CEG are rumoured to be focusing
on a site start in the coming months for a PIPELINE OF KEY REFURBISHMENT SCHEMES
new speculative office building in the order ADDRESS SIZE DELIVERY DEVELOPER
of 275,000 sq.ft. (SQ.FT.) DATE
THE MET TOWER, 120,000 2023 OSBORNE+CO
NORTH HANOVER
STREET
TAY HOUSE 88,306 Q4 2022 LONDON & SCOTTISH
300 BATH STREET PROPERTY INVESTMENT
MANAGEMENT LTD
SUPPLY AND TAKE UP (CITY WIDE) 50 BOTHWELL STREET 86,250 2023 ORION CAPITAL
4.0 MANAGERS
3.5 200 BROOMIELAW 79,300 Q1 2022 AM ALPHA
GROSVENOR BUILDING 25,213 Q1 2022 UBS ASSET
3.0
72 GORDON STREET MANAGEMENT
2.5
SPECTRUM 28,730 Q2 2022 TRINOVA REAL ESTATE
Million sq.ft.
76 WATERLOO STREET
2.0
69 BUCHANAN STREET 22,873 Q3 2022 WARBURG-HIH INVEST
1.5 REAL ESTATE UK LTD
1.0
0.5
0
2017 2018 2019 2020 2021
Supply Take-up
RYDEN SCOTTISH PROPERTY REVIEW 2022 | 14PERIPHERAL MARKET OUTLOOK PERIPHERAL DEALS
Activity in Glasgow’s peripheral office market Despite 2021 starting with a severe lockdown
ADDRESS SIZE OCCUPIER SECTOR
dramatically reduced in 2021, with total take up and finishing the year with the Omicron wave,
(SQ.FT.)
of 73,360 sq.ft. in 25 deals. This nets back to combined with no relaxation on working
a meagre 42,363 sq.ft. when the largest letting from home guidance for anything other than PART GROUND & 2ND 30,997 AMERICAN FILM
at Central Quay is discounted, as this was a essential working, 2021 delivered take up just FLOOR, CENTRAL QUAY NIGHTS PRODUCTION
relatively short term lease to a film company. over 50% up on the previous year. This was PRODUCTION
very positive. (SHORT TERM
75% of all lettings across the peripheral market LET)
were secured in suites under 2,000 sq.ft. There was a notable flight to quality for a large
portion of the market. The larger transactions
Supply levels remain relatively static although are well documented but at the smaller end of OUT OF TOWN DEALS
some of the larger peripheral office complexes the market there have been a number of deals
ADDRESS SIZE OCCUPIER SECTOR
have seen increased vacancies as a direct concluded in a new breed of Category A-Plus
(SQ.FT.)
result of the pandemic. fitted out offices, offering high end space on
flexible lease arrangements. 123 WESTERHILL ROAD, 98,120 OWNER HEALTHCARE /
OUT OF TOWN MARKET BISHOPBRIGGS OCCUPIER CHARITY
Take up in Glasgow’s out of town office market Strong ESG credentials are becoming
beyond the city boundary equated to 359,091 increasingly important to tenants. TITANIUM 3, BRAEHEAD 33,400 BMI HEALTHCARE HEALTHCARE
sq.ft. in 47 deals. BUSINESS PARK (OWNER
Most occupiers have taken a reduction in OCCUPIER)
This level far exceeded 2020 totals and space from the accommodation they currently
includes a number of sales, a theme continued occupy or reduced their requirement search GROUND & 1ST FLOOR, 30,190 LUMIRA DX LIFE SCIENCES
from the previous year. The figures are parameters to a smaller size, roughly 25% MAXIM 9, MAXIM OFFICE
somewhat skewed by a large sale of 123 less on average. PARK
Westerhill Road in Bishopbriggs of 98,120
sq.ft. that will be occupied by its new owners. As the country moves beyond Omicron, large RIVERSIDE, 2 KINGS INCH 27,999 BEEKS FINANCIAL IT
sectors of the market should be able to plan WAY, BRAEHEAD CLOUD
There continues to be extensive supply for a return to the office and crystallise future
of accommodation to the east of the city space requirements. ENTERPRISE AND 27,830 PRA LIMITED DEBT
centre although limited options that provide INNOVATION HUB, HALO, MANAGEMENT
newly refurbished space ready for immediate No change is expected to the flight to quality KILMARNOCK
occupation. trajectory nor the ever-increasing importance
placed on ESG. Flexibility will remain key
for a large sector of the market and take up
levels are expected to continue to build on the
progress made in 2021 as pent up demand for
office space is released. AS THE COUNTRY MOVES BEYOND
OMICRON, LARGE SECTORS OF THE
MARKET SHOULD BE ABLE TO PLAN FOR A
RETURN TO THE OFFICE AND CRYSTALLISE
FUTURE SPACE REQUIREMENTS.
RYDEN SCOTTISH PROPERTY REVIEW 2022 | 15OFFICES
EDINBURGH
CITY CENTRE DEALS DEMAND
In 2021 Edinburgh’s office market delivered
ADDRESS SIZE OCCUPIER SECTOR
a total of 770,988 sq.ft. of take up across
(SQ.FT.)
150 deals. This very strong recovery is a 49%
20 WEST REGISTER STREET 61,237 FNZ FINTECH increase in the number of deals and a 155%
increase in overall floorspace take-up against
2 FREER STREET 58,870 FANDUEL/FLUTTER TECHNOLOGY 2020, when the market was firmly in the grip
of the pandemic.
1 HAYMARKET SQUARE 32,766 CAIRN ENERGY OIL AND GAS
CITY CENTRE
1 HAYMARKET SQUARE 29,461 SHEPHERD & WEDDERBURN LEGAL SERVICES Edinburgh’s city centre transacted 686,176
sq.ft., which represented 89% of total office
1 HAYMARKET SQUARE 16,383 DELOITTE PROFESSIONAL SERVICES take up across the city. Grade A and high
quality accommodation account for 299,051
QUARTERMILE 3 14,641 ESRI (UK) LTD TECHNOLOGY sq.ft. or 44% of city centre office take up.
EXCHANGE CRESCENT 13,682 USERTESTING TECHNOLOGY The prime rental tone for Grade A city centre
accommodation has nudged upwards to
£38 per sq.ft. (there have been examples
of specific floors exceeding this tone) with
incentives holding at around 12-15 months
for a 10 year lease commitment to the highest
quality covenant.
RYDEN SCOTTISH PROPERTY REVIEW 2022 | 16PERIPHERAL SUPPLY PERIPHERAL DEALS
It was another difficult year for peripheral office Total office supply across Edinburgh at end Q4
ADDRESS SIZE OCCUPIER SECTOR
locations around Edinburgh. West Edinburgh 2021 was recorded as 1,785,240 sq.ft. which
(SQ.FT.)
attracted only 54,662 sq.ft. of activity across is a 3% decrease on Q4 2020. Thirty-three
8 deals. Prime rents sit at around £21.50 per percent of total space available comprises 1 LOCHSIDE AVENUE, 21,757 SCOTTISH PUBLIC
sq.ft. for refurbished options in the South Gyle Grade A or high quality refurbished Grade B EDINBURGH PARK PRISON SERVICE SECTOR
area and rising to £25 per sq.ft. for refurbished space which is a very slight increase on Q4
space on Edinburgh Park. The only notable 2020. Void rates around the city are roughly 51 TIMBER BUSH 6,970 PURE LIFI TECHNOLOGY
deal in excess of 10,000 sq.ft. was the letting 7% with a shortage of Grade A and high
of 21,757 sq.ft. at 1 Lochside Avenue to the quality refurbishment pipeline within the
Scottish Prison Service. city centre.
PRIME CITY CENTRE AVAILABLE SPACE
North Edinburgh also experienced low levels Occupiers continue to get to grips with their ADDRESS LANDLORD TENANTS AVAILABLE
of take up with only 10 smaller deals and prime current and projected spatial requirements (SQ.FT.)
rents sitting at around £18 per sq.ft. There was during this ongoing hybrid working phase
only one deal in excess of 5,000 sq.ft., at 51 and, while there has been some surplus space 20 BRANDON ABRDN ABRDN 139,172
Timber Bush (6,970 sq.ft.) to Pure LiFi for their released to the market, this additional supply TERRACE (SUB LEASE/
relocation from the proposed redevelopment has been offset by strong take-up. ASSIGNMENT)
of Rosebery House, Haymarket.
Supply of Grade A offices is of real concern CAPITAL SQUARE, BAM PROPERTIES BRODIES 54,012
within Edinburgh city centre. Proposals for new 62 MORRISON STREET /HERMES PINSENT
development and significant refurbishments INVESTMENT MASONS
which could help to alleviate this tight market MANAGEMENT
are highlighted in the table.
SALTIRE COURT, TIGON 7 CMS 35,449
CASTLE TERRACE KPMG (*ALSO 26,951
Supply has increased significantly in the
CLOSE OF TENANT
important West Edinburgh market with the
BROTHERS SPACE
space available from landlords or tenant,
SHOOSMITHS AVAILABLE
SUPPLY AND TAKE UP or in the pipeline, also tabulated (overleaf).
DELOITTE* HERE)
2.0 MARTIN CURRIE*
1-7 EXCHANGE STANDARD LIFE AMAZON 22,086
CRESCENT ABERDEEN JLL
1.5
(HEAD-TENANT) RYDEN
1 TANFIELD GREENRIDGE CRANEWARE 21,000
TRAINLINE
Million sq.ft.
ST MICRO
1.0
ELECTRONICS
10 GEORGE STREET ABERDEEN ARUP GROUP 18,645
STANDARD MACROBERTS
0.5 INVESTMENTS NURSING &
(HEAD-TENANT) MIDWIFERY
COUNCIL
0
2017 2018 2019 2020 2021
Supply Take-up RYDEN SCOTTISH PROPERTY REVIEW 2022 | 17CITY CENTRE NEW BUILDS AND PIPELINE OF KEY REFURBISHMENT SCHEMES WEST EDINBURGH/PERIPHERAL
ADDRESS SIZE DELIVERY DATE DEVELOPER ADDRESS SIZE DEVELOPER
(SQ.FT.) (SQ.FT.)
THE NETWORK, 80,000 APPROVED. 2024 ORION CAPITAL 1 NEW PARK SQUARE, 84,330 (Q2 2022) PARABOLA
NEW TOWN NORTH MANAGERS EDINBURGH PARK
EXCHANGE PLACE 4 20,000 APPROVED. TBC EP3 DEVCO LTD THE YOUNGER BUILDING, 89,863 (Q4 2022) SHELBORN ASSET
REDHEUGHS AVENUE MANAGEMENT
FOUNTAINBRIDGE C. 100,000 APPROVED. C 2025 CRUDEN HOMES (REFURBISHMENT)
AND BUCCLEUCH
PROPERTY VERDANT, REDHEUGHS 60,000 CEG
RIGG (REFURBISHMENT)
ELGIN HOUSE, C. 150,000 PLANNING. C 2025 EDINBURGH
HAYMARKET YARDS HAYMARKET 3 LOCHSIDE AVENUE, 50,000 SUBLET AVAILABLE FROM
EDINBURGH PARK SAINSBURY’S BANK
ROSEBERY HOUSE, 158,000 PLANNING AVIVA INVESTORS
HAYMARKET AWAITED. C 2025 4-5 LOCHSIDE AVENUE, 43,025 KNIGHT PROPERTY GROUP
TERRACE EDINBURGH PARK
(REFURBISHMENT)
28 ST ANDREW 60,000 PLANNING AVIVA INVESTORS
SQUARE AWAITED. C 2024 2 BROADWAY PARK 42,000 AMBASSADOR GROUP
(REFURBISHMENT)
CLARENDON 35,000 COMPLETION ABRDN
HOUSE, 116 OCTOBER 2022
OUTLOOK A continued improving picture as occupier
GEORGE STREET
The outlook for the Edinburgh office market confidence returns moving through 2022
(REFURBISHMENT)
is positive – the second half of 2021 delivered is anticipated.
30 SEMPLE STREET 56,000 APPROVED. 2024 BBC PENSION strong results with city centre Grade A space
(REFURBISHMENT) TRUST AND showing continued demand, particularly the The impact and emphasis of ESG on occupiers
CBRE GLOBAL flight to quality and quest for improved ESG thinking has continued apace through the past
INVESTORS credentials. As a result, supply of top quality 12 months and this is expected to continue to
space in the city centre is reaching critical be an important factor in any strategic decision
EDINBURGH ONE, 88,000 APPROVED. 2023 ODYSSEUS levels and significant occupier demand is making going forward – this is something that
MORRISON STREET CAPITAL expected to begin to look outwith the core occupiers, developers and investors will need
(REFURBISHMENT) city centre in order satisfy requirements. to bring into sharper focus in order to continue
Due to the disruptive effect of the Omicrom to thrive.
variant through late 2021, a slight lag in activity
through Q1 2022 into Q2 is anticipated as
occupiers continue to review their needs and
how they adapt to the new hybrid working.
RYDEN SCOTTISH PROPERTY REVIEW 2022 | 18THE OUTLOOK FOR THE EDINBURGH OFFICE MARKET IS POSITIVE AND A CONTINUED IMPROVING PICTURE AS OCCUPIER CONFIDENCE RETURNS MOVING THROUGH 2022 IS ANTICIPATED.
DEALS DEMAND The available Grade A office accommodation
In 2021 Aberdeen’s office market experienced within the city centre continues to fill up. Most
ADDRESS SIZE OCCUPIER SECTOR
a total take up of 197,914 sq.ft. across 48 notably, Shell is set to take all of the remaining
(SQ.FT.)
deals. This total highlights a 53% decline 100,000 sq.ft. of office accommodation at the
FORMER CHEVRON 41,367 ITHACA ENERGY OIL AND GAS in take up of floor space and a 9% decrease Silver Fin Building which is a hugely positive
HOUSE, HILL OF (UK) LTD in the number of deals concluded, when sign for the city centre market. Another suite
RUBISLAW, ABERDEEN compared to the figures produced in 2020. is also under offer in Marischal Square which
Take up fell by 50% in relation to the 5 year will leave just over 40,000 sq.ft. available
LANGSTANE HOUSE, 6 11,827 MENTAL HEALTH HEALTHCARE average. in that building.
DEE STREET, ABERDEEN ABERDEEN
The majority of office deals completed OUTLOOK
BUILDING 2, LEVEL 11,237 HSE/MET OFFICE SCIENCE were smaller and only 5 deals exceeded The performance of the Aberdeen office
1 ABERDEEN 10,000 sq.ft. during the course of the year. market continues to be held back by the
INTERNATIONAL The largest deal took place at Hill of Rubislaw pandemic. As more people are returning to
BUSINESS PARK, DYCE where Ithaca Energy (UK) Ltd purchased their offices and occupiers are planning for
the former Chevron House (96,357 sq.ft.), future moves it does feel as if the situation is
resulting in 41,367 sq.ft. of net take up. improving. However until there is a firm drive
SUPPLY AND TAKE UP back into offices the market is likely to remain
3.5 Prime rents for Grade A office accommodation subdued. Restricted demand and take up are
3.0 have fallen to £30 per sq.ft., from £32.50 per thus still anticipated during the early stages
2.5
sq.ft. in 2020, and generous rental incentives of 2022 but hopefully this will improve as the
remain prevalent in the market. year progresses.
Million sq.ft.
2.0
1.5
SUPPLY The price of oil has been steady over the last
1.0 Aberdeen’s office supply at the end of 2021 few months trading in excess of $80 per barrel.
0.5 totalled 2.81 million sq.ft. This is a 6% rise Under normal circumstances this would be
0 in comparison to office supply at the start of hugely positive but the uncertainty within the
2017 2018 2019 2020 2021 2021 reflecting an increasing vacancy rate industry in terms of energy transition and the
Supply Take-up within the market. consenting of new exploration allied to the
pandemic is resulting in a less buoyant market.
There are no new developments planned
for the coming year which can largely Different sectors are reacting in different
be attributed to the on-going uncertainty ways to remote working and the market has
surrounding the pandemic and new variants, yet to see how the energy industry will react
OFFICES
as well as the continuation of remote/hybrid to a hybrid model of working. This will clearly
working. The general uncertainty related to have an impact on spatial requirements moving
the offshore energy industry is also having forward but the hope is there will be a general
a negative impact on investor confidence. move back into offices when permitted which
will help to bolster demand.
ABERDEEN RYDEN SCOTTISH PROPERTY REVIEW 2022 | 20INDUSTRIAL
GLASGOW AND
WEST OF SCOTLAND
DEMAND DEALS
The West of Scotland industrial and logistics
ADDRESS SIZE OCCUPIER RENT SECTOR
market continues at record levels of activity.
(SQ.FT.) (PER SQ.FT.)
There is a complete range of requirements in
terms of size and uses however many remain BURNBRAE ROAD, 132,171 WINCANTON HOLDINGS PLC £6.25 LOGISTICS
unsatisfied due to the lack of available supply. LINWOOD
This is particularly true for larger requirements
and indeed there are few units of more than EDINBURGH ROAD, LINK PARK, 47,565 CO-OP £12.15 DISTRIBUTION
40,000 sq.ft. available across the Central Belt. NEWHOUSE (PRE-LET) FACILITY
The logistics and parcel delivery markets ATLAS, DOVECOTE ROAD, 56,984 CLIPPER LOGISTICS £6.35 LOGISTICS
remain very active but are not the only players EUROCENTRAL
in the market and a number of significant
production and manufacturing companies WARDPARK INDUSTRIAL ESTATE, 69,000 ROYAL MAIL GROUP £5.00 LOGISTICS
are seeking new space to accommodate CUMBERNAULD
expansion or changing needs. The combined
demand means strategic industrial land is in MASTERTON WAY, 37,740 ARTISANAL SPIRIT COMPANY £6.86 WAREHOUSING
short supply and a number of key industrial TANNOCHSIDE (SPIRITS)
estates will be developed out over the next
18 months. Extensions to existing parks
and infill projects are advancing and key
infrastructure works at Ravenscraig will release
much needed plots of scale however, these
are unlikely to be sufficient to accommodate THE LOGISTICS AND PARCEL
a strong market which is expected to remain DELIVERY MARKETS REMAIN VERY
busy for the next 5 years. Consequently,
ACTIVE BUT ARE NOT THE ONLY
there will be an increased focus on the
redevelopment of outmoded and obsolete PLAYERS IN THE MARKET.
facilities and the traditional industrial estates
will see greater development interest.
RYDEN SCOTTISH PROPERTY REVIEW 2022 | 21Take up of industrial floorspace across West through the market and landlords are actively in the Central Belt and is well placed to issued on both units. Also, within the Glasgow
Central Scotland in 2021 was 3.1 million sq.ft. pushing rents on secondary product after capitalise on a number of requirements that boundary, Wemyss Properties are now well
and this figure is expected to rise to circa years of stasis. Rent rises of 25% are now will only consider existing space or units under advanced on site to bring forward a 24,558
3.3 million sq.ft. once all deals are included. common at re-gears and renewals. On some construction. Knight have also commenced sq.ft. unit at Drumhead Road with completion
Consequently, there is the equivalent of 1.4 trade estates in and around Glasgow city Phase 4 of the Langlands Enterprise Park in in the summer.
years of supply and, in reality, availability is centre deals are completing at £13 per sq.ft. East Kilbride which will bring forward a stand-
even lower when obsolete and unlettable on smaller space and one estate is about alone 24,000 sq.ft. unit with 10 metre clear At Gartcosh, Fusion Assets is on site for a
property are removed. Although building age to bring a 5,000 sq.ft. unit to the market height and a 35,000 sq.ft. yard, completion second phase following a successful letting
is not an accurate guide to obsolescence, at an asking rent in excess of £10 per sq.ft. is scheduled for April 2022. to DX Services. Units of 16,000 sq.ft. and
it is interesting to note that nearly 50% of 24,500 sq.ft. will be completed later this year.
Glasgow’s stock was built pre-1980s and SUPPLY On the other side of the city, Frasers Property
nearly 7 million sq.ft. is more than 100 years According to CoStar, the total stock of Group are nearing completion of the 132,000 CoStar report a total of 745,629 sq.ft. under
old. It is likely that a high proportion of the industrial property in the Greater Glasgow area sq.ft. BAIZ Project at Hillington Park, which construction which is a marked improvement
remaining available space is unsuitable for now stands at 102 million sq.ft. with a vacancy provides a range of units from 5,111 to 25,467 on the output in recent years and possibly
current requirements and hence the true level of 3.2% and a total availability of 4.6% sq.ft. each with large yards and high levels signals a return to annual construction levels
availability is negligible and insufficient to (4,692,000 sq.ft.). Supply therefore remains of energy efficiency. The largest unit is now in excess of 1 million sq.ft. a year as was the
service a market of this size and in a period at or about a record low despite the total stock under offer and terms have been issued average in the early 2000s. The figures will be
of rising demand. This is borne out through having increased by almost 2 million sq.ft. on a number of the units, with a rental boosted by the new Harper Collins facility at
experience in prime areas where occupiers tone at £8.50 per sq.ft. Hillington Park has Nova Technology Park which will be 550,000
with requirements are now knocking on A new development cycle is now underway enjoyed high levels of occupancy and tenant sq.ft. and will achieve Scottish Enterprise’s
tenants’ doors and asking about availability. in the prime locations. Knight Property retention over recent years and additional ambition of attracting a large single user to this
Group are on site at Belgrave Logistics Park, space is much needed and will be followed strategic site. The project is in the final stages
According to CoStar, the average rent across Bellshill which is a redevelopment of the by further phases of new product and an of agreement. It is expected that other major
the entire leased stock is now £5.96 per sq.ft. former Devro facility. Five buildings will be active refurbishment programme. buildings will be announced in the second half
In isolation it is a meaningless metric given constructed providing new logistics space from of 2022 and in 2023.
the averaging involved in terms of size, quality 19,000 sq.ft. up to 125,000 sq.ft. and positive Within Glasgow, Harris Finance are
and location but as a trend it shows a 38% discussions are advancing with a number constructing two units on London Road to
rise from £4.32 per sq.ft. in 2015. Higher rents of occupiers. Unit E at 125,000 sq.ft. is the provide 10,000 and 20,000 sq.ft. at a rental
set on new product have been filtering down largest speculative unit under construction tone of £9.50 per sq.ft. and terms have been
NEW DEVELOPMENTS
DEVELOPMENT DEVELOPER/LANDLORD DESCRIPTION
LONDON ROAD, GLASGOW HARRIS FINANCE TWO UNITS OF 10,000 SQ.FT. AND 20,000 SQ.FT.
DRUMHEAD ROAD, GLASGOW WEMYSS PROPERTIES 24,558 SQ.FT. UNIT DUE FOR COMPLETION SUMMER 2022
BELGRAVE LOGISTICS PARK, BELLSHILL KNIGHT PROPERTY GROUP FIVE BUILDINGS FROM 19,000 SQ.FT. UP TO 125,000 SQ.FT
PHASE 4, LANGLANDS ENTERPRISE PARK, EAST KILBRIDE KNIGHT PROPERTY GROUP 24,000 SQ.FT. AND A 35,000 SQ.FT. YARD, COMPLETION IS SCHEDULED APRIL 2022
BAIZ PROJECT, HILLINGTON PARK FRASERS PROPERTY GROUP RANGE OF UNITS FROM 5,111 TO 25,467 SQ.FT.
GARTCOSH INDUSTRIAL PARK, GARTCOSH FUSION ASSETS PHASE 2 OF 16,000 SQ.FT. AND 24,500 SQ.FT. DUE FOR COMPLETION LATER IN 2022
RYDEN SCOTTISH PROPERTY REVIEW 2022 | 22OUTLOOK The West of Scotland industrial market continues to strengthen as new, growing and modernising occupiers are faced with ageing and obsolete stock. The development market is now responding across a number of locations and further major owner-occupier announcements are also anticipated.
DEMAND SUPPLY One notable trend is the effective equalisation
The industrial market in East Central Scotland The current supply of industrial property in of rents across a wider market area,
has been very active over the last 12 months East Central Scotland has fallen to 2.65 m particularly for small to medium sized units
with high demand and take-up and rising rents. sq.ft. giving a vacancy rate of only 3.1%, (1,500 sq.ft. to 10,000 sq.ft.), where Edinburgh
Some of this is a consequence of increased down from 4.9% reported last year. is no longer the only location capable of A TOTAL OF 1.32 MILLION SQ.FT.
demand for floorspace during the pandemic. achieving rents and yields that justify new OF INDUSTRIAL SPACE WAS TAKEN
However, looking beyond that as restrictions The developers and funders of new industrial development. Lettings during Q4 2021 UP IN EAST CENTRAL SCOTLAND
are now eased, it is clear that there continues accommodation earmarked for completion achieved £10 per sq.ft. in Loanhead; £9.50 per DURING 2021 IN 145 TRANSACTIONS.
to be a frustrated market place with a dearth within the next 12 months or so will benefit sq.ft. in Bathgate; £8.50 per sq.ft. in Dundee;
of quality properties available for letting or from the current market position. However and £8 per sq.ft. in Falkirk.
acquisition and a demand level that continues the quantity of new stock is very limited in
to outstrip supply. comparison to occupier demand driven by The scarcity of available buildings is most
the fast changing marketplace and underlying evident for larger accommodation of 30,000
A total of 1.32 million sq.ft. of industrial space obsolescence. The positive side of this story sq.ft. and above. The overall vacancy rate
was taken up in East Central Scotland during is summarised in the table with developers is at an all-time low so existing requirements
2021 in 145 transactions. Thirty of these deals including Chancerygate, Northern Trust, will have to consider other locations or venture
were for units larger than 10,000 sq.ft. This Michelin Scotland Innovation Parc (MSIP) and down the design-and-build route which is
is an increase of 44% on the 913,610 sq.ft. Fife Council having recently commenced or time consuming (18 to 24 months) and often
industrial floorspace take-up during 2020. completed new developments. This new stock presents other difficulties including cost
is necessary for the market and prime rents inflation, shortage of construction materials
are now well established across the area of and initially finding a site ready for immediate
between £8.50 and £10.00 per sq.ft. for the development. It is very difficult to see the
best quality, well located accommodation. current trend towards online shopping and the
need for last mile logistics changing even with
the current relaxation of COVID-19 related
restrictions so more design-and-build solutions
are inevitable.
EDINBURGH AND
EAST OF SCOTLAND
INDUSTRIAL RYDEN SCOTTISH PROPERTY REVIEW 2022 | 24The refurbishment of individual units and REFURBISHMENTS AND NEW DEVELOPMENTS
estates can be a quick way to meet the
DEVELOPMENT DEVELOPER/LANDLORD DETAILS
demands of the modern occupier seeking
quality accommodation. Estate owners will PENTLAND TRADE PARK, PENTLAND LANDSDOWNE EXTENSIVE REFURBISHMENT AND SUBDIVISION
see the benefits in rents achieved on the INDUSTRIAL ESTATE, LOANHEAD INVESTMENTS LTD OF 52,000 SQ.FT. INTO 4 TRADE COUNTER UNITS
estate and reduced vacancy due to the
best presented and specified properties BRUCEFIELD INDUSTRY PARK, MILEWAY RECENTLY ACQUIRED AND ARE EMBARKING ON AN
generally securing tenants quicker than LIVINGSTON EXTENSIVE REFURBISHMENT
ageing properties. The uplift in rents following
the refurbishment of industrial units can CAPITAL PARK, BANKHEAD AVENUE, CHANCERYGATE/BRIDGES PLANNING CONSENT GRANTED FOR THE LARGEST
be around 20-25%. SIGHTHILL INDUSTRIAL ESTATE, FUND MANAGEMENT SPECULATIVE INDUSTRIAL DEVELOPMENT AT
EDINBURGH 130,000 SQ.FT.
The largest redevelopment, sub-division
and refurbishment project in the East of TURNHOUSE COURT, NEWBRIDGE NORTHERN TRUST 14 INDUSTRIAL UNITS TOTALLING 28,413 SQ.FT.; WITH
Scotland is Michelin Scotland Innovation UNITS RANGING IN SIZE FROM 1,045-4,154 SQ.FT.
Parc (MSIP) in Dundee which totals over CONSTRUCTION WORKS COMPLETING IMMINENTLY
700,000 sq.ft. on nearly 100 acres. This is
attracting occupiers within the sustainable ICON BUSINESS PARK, ICON DEVELOPMENTS 11 UNITS RANGING FROM 1,023-1,700 SQ.FT. MOST
mobility and low carbon sectors and a number KIRKTON CAMPUS, LIVINGSTON OF THE UNITS ARE NOW LET WITH THE FINAL UNITS
of significant lettings have been secured. MSIP DUE TO COMPLETE Q1 2022
is a joint venture between Michelin, Dundee
City Council and Scottish Enterprise and is a PHASE 2 WEST WAY, HILLEND AND FIFE COUNCIL CONSTRUCTION RECENTLY COMMENCED ON 8 NEW
great example of public/private collaboration DONIBRISTLE INDUSTRIAL ESTATE, UNITS TOTALLING 14,200 SQ.FT.
to deliver a successful transition of redundant DALGETY BAY
factory premises into a modern, green
business location. FULHAME BUILDING, MSIP, DUNDEE MICHELIN, DUNDEE CITY 6 RECENTLY COMPLETED LIGHT INDUSTRIAL UNITS
COUNCIL AND SCOTTISH TOTALLING 12,000 SQ.FT.
ENTERPRISE
LAMMERMOOR AVE, ABBOTSFORD SALTIRE BUSINESS PARKS 10 NEW UNITS TOTALLING 11,628 SQ.FT.
BUSINESS PARK, FALKIRK
PLOT 7, EASTER INCH, BATHGATE CM STEEL 12 UNITS TOTALLING 15,070 SQ.FT.
ABBOTSFORD BUSINESS PARK, SPRINGFIELD 10 NEW UNITS TOTALLING 11,628 SQ.FT. RANGING
FALKIRK DEVELOPMENTS FROM 1,057-1,568 SQ.FT. MOST OF THE UNITS ARE
NOW LET
RYDEN SCOTTISH PROPERTY REVIEW 2022 | 25DEALS OUTLOOK
It is difficult to envisage any significant change
ADDRESS SIZE OCCUPIER RENT SECTOR
in the current market balance across the
(SQ.FT) (PER SQ.FT.)
East Central Scotland industrial property
28 SOUTH GYLE CRESCENT, 17,688 UPS £8 LOGISTICS sector, given minimal availability and constant
EDINBURGH pressure from occupiers seeking property to
meet their operational and sustainability needs.
UNIT 8 CAPITAL PARK, BANKHEAD 15,000 TRAVIS PERKINS TRADING £8.60 TRADE
AVENUE, SIGHTHILL CO LTD The rental and yield equation now supports
new development across the market area.
FORT KINNAIRD TRADE PARK, 10,276 WHOLESALE DOMESTIC £10 TRADE This will encourage both the private and public
EDINBURGH sector landowners to consider development.
UNIT 2, 7 HILLS BUSINESS PARK, 9,461 ARW BARRIE LTD £9.50 LOGISTICS The next challenge for the market is to
EDINBURGH meet the gradual return of the manufacturing
sector. A number of active enquiries from
BLOCK A PENTLAND TRADE PARK, 27,350 TRAVIS PERKINS TRADING £12.75 TRADE businesses in that sector will provide even
PENTLAND INDUSTRIAL ESTATE, CO LTD greater challenge to provide suitably designed
LOANHEAD and specified accommodation.
5 ROYSTON ROAD, DEANS INDUSTRIAL 122,892 ACEO LTD SALE WAREHOUSING
ESTATE, LIVINGSTON (WHISKY)
2 RAW HOLDINGS, CAMPS INDUSTRIAL 44,828 FINESTAR LTD SALE LOGISTICS
ESTATE, EAST CALDER
UNIT H NEWARK NORTH ROAD, 66,982 KKR LTD SALE STORAGE AND
GLENROTHES DISTRIBUTION
UNIT 6A PITREAVIE BUSINESS PARK, 15,838 HIRE STATION LTD £4.50 TRADE
DUNFERMLINE
RYDEN SCOTTISH PROPERTY REVIEW 2022 | 26INDUSTRIAL
ABERDEEN
DEMAND As expected the vast majority of the deals
The industrial property market in Aberdeen were related to the oil and gas industry. The
remained challenging in 2021 due to logistics and distribution requirements that are
COVID-19 and the continued downturn in the so prevalent in other cities have been satisfied
oil and gas industry. The oil price has however, with Amazon, DPD and Fedex having secured
risen to above $80 per barrel which gives new premises in Aberdeen in recent years.
grounds for optimism moving forward. Take
up in 2021 totalled 654,677 sq.ft. which was Notable deals include the letting of premises
a 9% decrease on 2020 and a marginal 1% totalling 36,624 sq.ft. in Badentoy Industrial
decrease on the 5 year average of 664,351 Estate to Coretrax where the landlord had
sq.ft. invested a significant sum in the extensive
refurbishment of the building; the letting of
There were 91 transactions in 2021 which was E1, ABZ Business Park to Draeger which is
a 23% increase from 2020 when there were a a modern industrial unit totalling 17,248 sq.ft.
total of 72 transactions. The average deal size on a new business park overlooking Aberdeen
is now 7,194 sq.ft. which is a fall from 10,010 Airport; and the letting of Knight Property
sq.ft. in 2020. There were 22 deals over 10,000 Group’s speculative trade counter development
sq.ft. which is a decrease of 13% on 2020. in Westhill to Toolstation, Screwfix and The
Paint Shed where all of the tenants were
secured pre-completion on long lease terms.
AS EXPECTED THE VAST MAJORITY
OF THE DEALS WERE RELATED TO
THE OIL AND GAS INDUSTRY.
RYDEN SCOTTISH PROPERTY REVIEW 2022 | 27SUPPLY rates and in some cases properties are being Prime rents in Aberdeen are £8.75 per sq.ft.
Industrial property supply in Aberdeen totals sold at auction for low capital rates per sq.ft. for workshop space, £17.75 per sq.ft. for offices
approximately 3 million sq.ft. The supply of and £2 per sq.ft. for concrete yards. There has
industrial property in Aberdeen has grown Occupiers continue to seek good quality been significant downward pressure on rents
continuously over the last five years although modern industrial space but there is less than for second hand properties in recent times
this is now slowing. A large proportion of 150,000 sq.ft. of new build stock on the market as landlords are having to offer flexible lease
the available stock is towards the end of at present. Aberdeen needs more speculative arrangements and very competitive rental
its beneficial life and now no longer suits development to address this shortage but rates in order to secure tenants. The situation
occupiers’ needs, especially as tenants seek rising build costs and uncertainty from the oil will only change once certainty returns to
more energy efficient buildings. With the and gas occupiers means that they are only the market and some of the surplus stock is
abolition of vacant rates relief in Scotland a willing to commit to 3 to 5 year lease terms, taken up. At a time when competition is fierce
few years ago, landlords now have significant making it difficult to stack up financially for the landlords continue to need to extensively
holding costs and in a challenging market developers. Some developers are however refurbish buildings in order to stand a chance
like Aberdeen’s are now looking at ways of pressing ahead with new schemes, most of securing an active occupier requirement.
reducing these overheads ie. the demolition of notably Knight Property Group in Westhill,
buildings that cannot secure tenants. A number ANM Group/GSS Developments at Thainstone
of transactions in the Aberdeen market over Business Park and Dandara at City South in
the last 12 months have been at low rental Portlethen.
DEALS
ADDRESS SIZE (SQ.FT.) OCCUPIER SECTOR
CRATHES & KILDRUMMY BUILDINGS, HOWE MOSS 76,146 AKER SUBSEA OIL AND GAS
TERRACE, DYCE
BADENTOY ROAD, BADENTOY INDUSTRIAL ESTATE, 36,624 CORETRAX OIL AND GAS
PORTLETHEN
35 YORK PLACE, ABERDEEN 35,066 KENWAY TYRES LTD MOTOR TRADES
WOODSIDE ROAD, BRIDGE OF DON 35,037 VALLOUREC OIL & GAS LTD OIL AND GAS
UNITS 1-8 FARBURN INDUSTRIAL ESTATE, DYCE 23,800 LJF POWDER COATING METAL COATINGS
ROWAN HOUSE, PETERSEAT DRIVE, ALTENS 20,605 THE REAL MCKAY LTD LOGISTICS
UNIT E1, ABZ BUSINESS PARK, DYCE 17,248 DRAEGER OIL AND GAS
RYDEN SCOTTISH PROPERTY REVIEW 2022 | 28You can also read
