Supply

The supply of warehouse space in Scotland for units over 100,000 sq ft now stands at 1.28m sq ft across eight units – a 45% rise since the start of the year, yet still below figures seen 12 months ago. Using the three-year average annual take-up, there is 1.44 years’ worth of supply in Scotland.

The supply continues to consist of low-quality units, with 45% of space on the market being Grade B space and 55% Grade C. There is a significant gap between demand and availability of Grade A space, with the majority of warehousing failing to meet the widely desired EPC Grade B standard, indicating a need for substantial upgrades and retrofits to meet the growing demand for energy efficiency.

Of the eight units currently available, six 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, predicts that rental growth will reach an average of 4.6% per annum over the next five years.

Take-up

The predominant activity in Scotland revolves around smaller-sized units, as the supply of units over 100,000 sq ft remains limited. In the first half of 2023, there were two transactions recorded, totalling 290,000 sq ft, both of which were within the 100,000–200,000 sq ft size range. The long-term H1 transactional average stands at 309,432 sq ft.

Upon analysing the take-up by grade, it becomes evident that all the recorded take-up comprised second-hand space. Among this space, 50% constituted second-hand Grade A properties, while the remaining 50% represented second-hand Grade B properties. The activity can be attributed to third-party logistics firms and manufacturers, each accounting for 50% of the overall activity.

Notably, the largest deal in 2023 was Eurocentral 145, involving the acquisition of a 145,000 sq ft property by Savills for one of our occupier clients. The demand for bespoke buildings that precisely align with operational needs is also gaining significant traction, with Savills currently tracking multiple requirements from occupiers seeking such customised spaces.

Development pipeline

Continuing on from the last report, there is still a single unit over 100,000 sq ft under construction, speculatively over 100,000 sq ft at Belgrave Logistics Park, where Knight Property is developing 126,960 sq ft – it’s currently under offer. Savills is continuing to track the future land pipeline in the region and is currently analysing c.450 acres at various stages in the planning process.

_{Read the articles within Big Shed Briefing below.}