OVERALL occupier demand was ‘subdued’ in Scotland during the third quarter of 2026, according to the latest Royal Institution of Chartered Surveyors (RICS) commercial property monitor.
A net balance of -5% of Scottish respondents noted that overall occupier demand fell through Q3, but there was some variance at a subsector level.
A net balance of -7% of respondents reported a decline in demand for office space, down 14% in the Q2 survey. 7% noted an increase in demand for industrial space, while a net balance of -15% said there was a fall in demand for retail space, which is less negative than the -25% seen in the previous survey.
Investor demand is also relatively muted. A net balance of 4% of respondents in Scotland reported a rise in investor enquiries at all sector level.
In terms of the short-term outlook, Scottish respondents are relatively optimistic about rental growth, with a net balance of 20% expecting rents to rise over the next three months at an all sector level.
Capital values are predicted to fall broadly flat over the next three months, with the industrial sector being the only subsector expected to see a rise in capital values in the short-term.
John Duffy of Colliers International in Glasgow said, “High street and shopping centre values are stable. There is upward pressure on retail park values.”
Leigh Porteous of DM Hall in Dunfermline added, “The market has slowed in the last few months with fewer enquiries. Values are not yet affected but it will take time to reflect.”
Commenting on the UK picture, Tarrant Parsons, head of market research and analysis at RICS, said, “The latest survey results point to a more challenging backdrop for the commercial property market, with the investment side bearing the brunt of higher borrowing costs following the recent rise in gilt yields to their highest levels in almost two decades. As financing conditions have tightened, expectations for capital value growth have softened, particularly in the near term.
“That said, market conditions remain far from uniform. Occupier demand has proven relatively resilient, albeit somewhat less robust than in the previous quarter. Prime offices and industrial assets continue to outperform, with respondents still anticipating rental growth and modest capital value appreciation across these segments over the year ahead. In contrast, sentiment towards secondary assets has weakened further, highlighting an increasingly pronounced divergence in performance across the market.”
