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Vacancy rate is now 3.34%; all space is second-hand and low-quality
Eurocentral 145, which Savills has acquired for an occupier client
Take-up in Scotland of units over 100,000 sq ft continues to remain lean due to the low availability of new speculative development but also due to the economic pressures that are affecting the ability for clients to go down the built-to-suit route. Despite this, the low vacancy rate of 3.34% is contributing to encouraging rental growth in the region and reduced incentives
Ross Sinclair, Director, Glasgow
Supply
The supply of warehouse space in Scotland for units over 100,000 sq ft now stands at 884,094 sq ft across six units, which equates to a vacancy rate of 3.34%. Using the three-year average annual take-up, there is just 0.94 years’ worth of supply in Scotland.
Continuing on from past years, 11% of space on the market is Grade B, and 89% is Grade C space.
Of the six units currently available, four are within the 100,000–200,000 sq ft size band, and two are within the 200,000–300,000 sq ft size band.
RealFor, an economic forecaster, predict that rental growth will reach an average of 1.6% per annum over the next five years. Due to the lack of good-quality stock, Savills expects rental growth to exceed this on premium buildings through increased competition.
Take-up
Due to the record low levels of supply, take-up of units over 100,000 sq ft in 2022 has been subdued in comparison to previous years, reaching 576,449 sq ft across four transactions. In comparison, Scotland sees, on average, 836,648 sq ft of space transacted per annum across four units.
Analysing take-up by grade shows 36% of take-up was built-to-suit space, and 64% was second-hand space adhering to past trends. In terms of grade, 36% was Grade A space, 25% was Grade B space, and 39% was Grade C space.
In 2022, occupier preference continues to revolve around the 100,000– 200,000 sq ft size band. There have been three transactions within the 100,000–200,000 sq ft size band, and a single transaction within the 200,000–300,000 sq ft size band. On average, 60% of transactions per annum are within the 100,000–200,000 sq ft size band. The largest transaction this year was the sale of 10–12 Cloberfield Road, comprising 226,449 sq ft to a private occupier. Manufacturers accounted for 36% of take-up in 2022, and 3PLs accounted for 25%.
Development pipeline
Developers have responded to the increased demand for better quality and larger units in the region, and there is now a single unit over 100,000 sq ft under construction at Belgrave Logistics Park where Knight Property are developing 126,960 sq ft.
Read the articles within Big Shed Briefing below.
