Jamie Fergusson, Knight Frank
THE growth in e-commerce and a lack of new stock are combining to push up prices and rentals in Scotland’s industrial property market.
Knight Frank’s latest Logistics and Industrial Commentary (LOGIC) report, covering the first six months of 2017, highlights a 54 per cent increase in purchases against the previous six months, up to £88 million from £57m.
Calling the current situation a “perfect market” for investors, Jamie Fergusson, capital markets partner at Knight Frank, said: “Investors are chasing industrial property. The only way for rents to go in the foreseeable future is up.”
He added that increased yields and valuations reflected the sector’s strength: “Although we are almost at the point where speculative development is viable – there’s little sign of the market topping out.”
Glasgow saw a number of deals involving larger premises, driving a 23 per cent uplift in units more than 50,000 sq ft. Limited stock in the city has seen rent on properties less than 20,000 sq ft hitting £8 per square foot.
Conversely, activity in Edinburgh has been concentrated around the sub-5,000 sq ft band, with requirements largely coming from local SMEs and last-mile delivery services. Steady demand, coupled with a lack of available land, has pushed rents up to £9 per sq ft, said Knight Frank.
In Aberdeen, demand continues to be impacted by the oil and gas downturn. Headline rents have fallen since the beginning of 2017 and incentives of up to 12 and 18 months are being exchanged for five and 10 year leases, respectively.
Calling the market buoyant, Simon Capaldi, industrial agency partner at Knight Frank in Edinburgh, said: “A chronic lack of supply and limited new-build activity are forcing rents upwards in Edinburgh and Glasgow.”
Source:HeraldScotland
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