Rents Stabilise in the Scottish Commercial Property Market

A dour, but steady, recovery is underway in the Scottish commercial property market, reflecting the slow progress of the economy. The view from Ryden is that the industrial sector has experienced the shallowest decline and, while demand for offices is reduced, it is steady. The lack of new development is putting a floor under the market. CB Richard Ellis notes that the revival in the final quarter of 2009 “lost some pace in the first quarter of this year, although still displaying strong total returns of 5.5% with capital growth of 3.8%.”

The good news in the analysis is that office rents were flat in January-March after declining in the final quarter. The agent added that “surveys for Scottish business sentiment have been disappointing and in the first quarter the Lloyds TSB Business Monitor suggested that 47% of businesses reported a decline in turnover, while the Scottish Chambers of Commerce referred to a decline in confidence and activity. It should be remembered that the weather was harsh in Scotland in the first few months of the year, and this is known to have hit the level of activity. Sales and lettings of offices are running at only 75% of the long term average with the resilient performance during the recession owing a lot to a number of substantial deals in Glasgow. The market is waiting for economic recovery to lift the performance.

The West of Scotland has been less affected by the decline in the industrial market than other parts of the country. Ryden said: “The prospect of market recovery including rental performance and investor interest is encouraging developers in some locations to start preparing proposals for new industrial schemes. Occupier demand remains healthy for units smaller than 929 sq.metres (10,000 sq.ft.) but with fewer deals at the larger end.” There should be no surprise, therefore, that investment in industrial property has been strong with returns last year double the rest of the UK.

The Scotland Commercial Property Register

The Scotland Commercial Property Register for Sctoland is a leading UK business property publication from Martin Austen Publishing. The aim of the publication is to offer a simple and effective means of finding Offices Space, Serviced Offices and Commercial Property in Scotland . You can also find the latest commercial property news for Scotland.