NEW research has revealed rents and capital values in Scotland’s commercial property sector are expected to increase in the short-term, thanks to low availability of industrial and office space and stable demand.
The findings have been revealed in the latest Royal Institution of Chartered Surveyors (RICS) Q2 Commercial Property Monitor.
A net balance of 5% of respondents reported an increase in demand for office space, while a net balance of 15% reported demand grew for industrial. A net balance of -10% of respondents reported a fall in occupier demand for retail space, meaning that overall, occupier demand edged up marginally in Q2 with a net balance of 3% of respondents in Scotland noting an increase at all-sector level.
With availability of industrial and office space reported to be constrained, a net balance of +28% of respondents in Scotland anticipate commercial property rents will rise during the next quarter. A net balance of 37% expect rents to rise for industrial space, with a net balance of 42% anticipating rents for office space to increase – the highest this balance has been since March 2016.
Capital values are also tipped to rise, with a net balance of 31% of respondents expecting an increase at all sector level. All three sub-sectors are expected to experience increases in capital values over the next quarter. A net balance of 37% anticipate a rise regarding office space, 42% for industrial space, and 15% in retail space.
The research found that surveyors remain optimistic on the 12-month outlook for capital values. A net balance of 13% of respondents in Scotland expect an increase at an overall level. Capital values for both office and industrial space are expected to rise, with net balances of 23% and 34% respectively. However, capital values in retail are expected to be lower in a year’s time (a net balance of -17%).
