Demand for industrial and logistics space in Scotland is outstripping supply, leading to ongoing upward pressure on rents, according to new analysis.
Property and investment management firm Colliers is warning that a “perfect storm” of factors – many related to the pandemic – are coming together to create a critical mismatch between supply and demand of industrial space of all sizes across the country.
While developers are keen to bring forward new speculative developments, build cost inflation and a shortage of construction materials are proving a challenge.”
Iain Davidson, Colliers.
Covid-19 lockdowns have massively accelerated the trend towards online shopping and the need for speedy “last mile” logistics to get goods, including essential medical supplies, to where they need to be without delays. This has driven up demand for suitable space.
Colliers says this situation is being exacerbated by increased construction costs and a shortage of building materials that relate to both the pandemic and the impact of Brexit.
Dearth of supply
Iain Davidson, director of industrial and logistics, Colliers, said: “Demand is exceptionally strong for industrial space in Scotland.
“However, the lack of supply has had a significant effect on take-up. Despite relatively low take-up, the market is strong. It’s just that there’s a real dearth of supply for occupiers to take.
“We have a perfect storm. While developers are keen to bring forward new speculative developments, build cost inflation and a shortage of construction materials are proving a challenge. As a result, occupiers will inevitably face rent increases.”
Colliers’ analysis shows the availability of industrial space is at an all-time low in Scotland, with a vacancy rate of 4%.
But deals are still being done – rocket firm Skyrora recently agreed a lease of 52,000sq ft in Cumbernauld and north-east road haulier Caledonian Logistics took 38,000sq ft at Wardpark Industrial Estate in Cumbernauld.
Retail giant Amazon has remained at the forefront of recent activity in Scotland, with the pre-let of a 144,000sq ft build-to-suit distribution hub at Glasgow Business Park.
Mr Davidson added: “Demand for industrial and logistics space is set to remain exceptionally strong in Scotland and speculative development will need to pick up to fill big gaps in supply.”
