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Vacancy rate remains stable at 4.95%; forecast to drop to 3.2% by Q4 2024
Recently developed Belgrave Logistics Park, comprising of 126,960 sq ft. Savills has placed under offer, acting for the tenant.
Unsurprisingly, the economic crisis of the past year has caused a shift in occupier requirements throughout the region. Savills has witnessed a decline in leasehold BTS requirements yet an uptick in interest for freehold properties and land. Pleasingly, transactions on existing units demonstrate continued rental growth with minimal incentives, evidencing the continued strength of the market
Ross Sinclair, Director, Glasgow
Supply
The supply of warehouse space in Scotland for units over 100,000 sq ft now stands at 1.52m sq ft across ten units – a 72% rise in the last 12 months. Using the five-year average annual take-up, there is 1.96 years’ worth of supply in Scotland.
The supply continues to consist of low-quality units, with 37% of space on the market being Grade B space and 54% Grade C. The 9% of Grade A speculatively developed space on the market is under offer and set to exchange imminently. Savills is acting for the tenant. The vast majority of warehousing continues to fail to meet the widely desired EPC Grade B standard, indicating a need for substantial upgrades to meet the needs of occupiers.
Of the ten units currently available, eight units are within the 100,000–200,000 sq ft size band and two are within the 200,000–300,000 sq ft size band.
Savills new rental growth forecasting model suggests the region will see 4.1% rental growth per annum over the next five years.
Take-up
The predominant activity in Scotland revolves around smaller-sized units, as the supply of good quality units over 100,000 sq ft remains limited. In 2023, take-up of units over 100,000 sq ft has reached 545,000 sq ft across three transactions. There have been two transactions within the 100,000–200,000 sq ft size band and one within the 300,000–400,000 sq ft size band.
Analysing take-up by specification shows an increasing shift towards best-in-class buildings, with 55% of activity being built-to-suit space and 45% being second-hand space. In terms of specification, 73% of space transacted was Grade A, and 27% was Grade B.
In the last year, 3PLs have been the most active, accounting for 82% of activity in the region. Interestingly, as more certainty returns to the wider economic market, we have seen an uptick in activity from manufacturers that have accounted for 18% of activity.
Development pipeline
There is a single unit under construction within Scotland over 100,000 sq ft. Westway 200 in Renfrew is being developed by Canmoor and, once completed, will provide 202,230 sq ft of Grade A space. Additionally, Savills is tracking c.450 acres at various stages in the planning process, which could provide BTS options.