Savills: Scotland’s industrial market holds strong in 2020 despite COVID-19
The take-up of industrial & logistics space as hit record levels in Scotland in the first half of 2020, according to Savills latest Big Shed Briefing.
The occupation of such units reached 704,531 sq ft (65,453 sq m) across four transactions, marking a 165% increase on the long-term half-year average and 95% increase on the first half of 2019.
The firm says take-up has entirely consisted of second hand units, with no new speculatively developed units in supply in Scotland, reducing total supply by 9% from the end of 2019 to stand at 1.34 million sq ft across nine separate units. Savills says just 12% of available supply is considered Grade A quality.
Ross Sinclair, director in the industrial team at Savills in Glasgow, commented: “Take-up continues to be constrained by both shortages in the size and quality of available units throughout the region with occupiers having to settle for lower quality options to satisfy their requirements. With no sign of speculatively developed units over 100,000 sq ft in Scotland, ongoing demand and the resulting decline in supply will keep the vacancy rate low in the short to medium term and push rents up.
“The bread and butter of Scotland’s industrial sector continues to be smaller, sub-100,000 sq ft units, and this end of the market has seen a game of two halves with Q1 being extremely active, and Q2 significantly hampered by COVID-19. However as restrictions lift, we have experienced strong levels of enquiries similar to the start of the year. The shortage of new space will continue to bring reduced incentives and positive rental growth.”
Three of the four largest industrial leasing deals to complete in Scotland in H1 2020 include: Iceland committing to 284,000 sq ft on Houston Industrial Estate, Livingston; Stanford Logistics agreeing to 122,575 sq ft at Titan Eurocentral, Motherwell; and Hewlett Packard Enterprise signing a new lease on 170,956 sq ft at HP Erksine, Bishopton.
Across the UK, Savills reports 22.4 million sq ft (2.081 million sq m) of take-up of 100,000 sq ft + industrial & logistics space, 66% above the long-term average. U
Unsurprisingly, 43% of take-up can be attributed to online retailers, with Amazon alone accounting for up to 84% of this figure. Furthermore, 3PLs accounted for 15%, many undertaking contracts for the NHS. A further 11% were short-term lease agreements as a result of Covid-19, including space to hold excess stock by retailers with a dominant high street presence.
- Read all of our articles relating to COVID-19 here.