Vacancy rate falls to 4.28%; forecast to drop to 3.92% by Q4 2024
Recently exchanged and developed Belgrave Logistics Park, comprising of 126,960 sq ft. Savills acted for the tenant.
Recent surges in demand for industrial and logistics properties in the Scottish Central Belt suggest an uptick in activity in the second half of 2024. However, several barriers to growth exist. Occupiers are increasingly seeking top-quality stock, and the shortage of Grade A big box facilities is pushing them towards properties under 100,000 sq ft, a segment that has performed well
Ross Sinclair, Director, Glasgow
Supply
The supply of warehouse space in Scotland for units over 100,000 sq ft now totals 1.36m sq ft across seven units, marking an 11% decline over the past six months, which indicates that the region is past the peak in vacancy. Based on the five-year average annual take-up, there is 1.72 years’ worth of supply in Scotland. The five-annual take-up for Grade A space is currently around 320,000 sq ft. With no Grade A supply available, occupiers must resort to BTS options or settle for smaller warehouses.
The existing supply consists entirely of lower-quality units, with 42% being Grade B and 58% being Grade C. The recently completed Belgrave Logistics Park was the only Grade A building available, which has now been leased – Savills represented the tenant. Savills’ requirements database indicates that tenants are increasingly concerned about power and energy costs, driving demand for buildings with higher sustainability credentials. However, most warehouses in Scotland do not meet the desired EPC Grade B standard, necessitating significant upgrades to satisfy occupiers’ needs.
Of the seven units currently available, three units are within the 100,000–200,000 sq ft size band and four are within the 200,000–300,000 sq ft size band.
Take-up
The predominant activity in Scotland centres around smaller units due to the limited supply of good-quality spaces over 100,000 sq ft. In 2023, the take-up of units over 100,000 sq ft reached 545,000 sq ft across three transactions: two within the 100,000–200,000 sq ft range and one within the 300,000–400,000 sq ft range. In 2024, there has been one transaction within the 100,000–200,000 sq ft size band. Belgrave Logistics Park was leased by a third-party logistics firm looking to expand within the central belt.
As observed across the United Kingdom, occupiers are seeking best-in-class buildings. On average over the past five years, 43% of transacted space has been Grade A, 44% Grade B, and 13% Grade C. The proportion of high-quality take-up increases when speculatively developed units reach completion, underscoring sustained demand.
Development pipeline
There has been no change in the development pipeline. Canmoor continues construction of Westway 200 in Renfrew which 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.