NEW research has revealed there is an ‘urgent’ requirement for speculative development of industrial and logistics space in Scotland to meet occupational demand.
Property and investment firm Colliers said it is seeing demand from companies across a range of sectors, partly as a result of changes brought about by the Covid-19 pandemic. The firm added that it expects average rents to grow at a ‘moderate pace’ this year on the back of ‘tight availability and robust occupier activity’.
When it comes to leasing activity, Colliers said the healthcare and medical sectors were active last year, with large amounts of supplies having to be easily accessible to be quickly moved around the country. With Covid-related restrictions leading to a rise in online shopping, the storage, distribution and parcel delivery sectors were all looking to lease more space. Colliers added that other sectors such as food and drink, engineering and manufacturing were also driving demand for industrial accommodation.
Iain Davidson, director of industrial and logistics at Colliers in Glasgow, said, “Coronavirus has had a devastating impact on many parts of the economy, but it has also driven up demand for industrial space across Scotland, which was already strong before the pandemic. I see leasing activity continuing to increase this year, as companies look to build more resilience into their supply chains.
“Businesses are adopting more localised strategies, while increasing capacity and efficiency. There is therefore an urgent need for speculative development in Scotland if this demand is to be met.
“The development market now appears to be responding to robust occupational demand, but it will be at least 2022 before most proposed schemes come on stream. Even then, in our opinion, the pipeline being suggested will be insufficient to meet current and projected demand.”
Colliers said that in the east of Scotland, the speculative development segment has taken a ‘slightly different path’ than in the west. Lewis Pentland, associate director of industrial and logistics at Colliers in Edinburgh, added, “While there has been some speculative development activity in the East, this has been limited to smaller multi-let estates. We are now witnessing a shortage from 20,000 sq ft upwards. As a result, we are seeing rental growth in existing stock, with design and builds likely to feature more prominently over the coming months.”