The second half of 2017 saw the beginning of what looks like a resurgence in the central belt’s commercial property market. Ian Manson, chief executive of Clyde Gateway, explains why that’s good for businesses.
The industrial sector in particular is showing strong levels of demand. There’s a healthy appetite for high quality industrial property, which is in short supply after many years when very little speculative building was going on.
A number of new-build industrial units have recently been completed or currently on site, but until the development market catches up with demand, occupiers looking for industrial premises in central Scotland’s best locations are faced with very limited options.
As you might expect, this shortage means rents are growing - prime headline rents in central Scotland trade parks are around £107 per sq m, with rents at general prime locations firmly established between £81 and £91 per sq m (source: Ryden). The Small Business Rates Relief initiative has also boosted the rents of smaller units, as an increasing number have the potential to be rates-free for qualifying occupiers.
The current vacancy rate for the greater Glasgow industrial market is only 5.2%, and as many vacant properties need re-developed or refurbished, the true availability of ready-to-occupy properties is even lower. To put this in context, vacancy rates of 30% were not unheard of during the 1990s.
It’s no longer just manufacturers who need industrial property. One area of rapid growth is the rise of online shopping and increasing customer expectation that their goods will be delivered the next day. This means retailers need more and more storage sheds all over the country.
In popular industrial estates, occupier turnover is low, with existing tenants often staying put simply because there’s nowhere else suitable to go.
A combination of all these factors means that if there is any significant upturn in market activity, the shortage of modern, fit-for-purpose industrial properties could become so severe that it restricts economic growth.
At Clyde Gateway, we have gone against the grain when it comes to industrial property, and are now reaping the rewards in terms of lettings secured. Over £1.5bn has been invested in the Clyde Gateway area over the last nine years, from both the public and private sector. Thanks to investment support from major national developer MEPC, Clyde Gateway East Business Park beside the M74 has been one of the few locations where industrial units have recently been built speculatively.
Clyde Gateway East has been extremely successful, securing high calibre tenants including BT, Glacier Energy, Dentec Scotland, Cusack and most recently The Greencore Group. The feedback from tenants has been overwhelmingly positive. We’ve already had a healthy number of enquiries on our latest 27,500 sq ft speculative unit.
In addition, local developer Harris Finance has been building speculatively at Rutherglen Links Business Park, after buying land which had been remediated and prepared by Clyde Gateway. It has already secured Screwfix, Eurocell and TransCanada Turbines as tenants, and another 20,000 sq ft unit is now complete and available, with plans in place to build further units.
Clyde Gateway’s reputation as a business location is growing all the time, not just because of the excellent transport links but also due to the business support and superfast broadband we can provide. Infrastructure and connectivity are major drivers for the industrial property market, so there’s no doubt that the completion of recent improvements to the Raith interchange and the motorway network to the east of Glasgow has enhanced the area’s attraction and competitiveness even further.
I am confident that strong demand for the high quality industrial property we can offer, combined with a continued lack of supply, will ensure 2018 is another great year for Clyde Gateway.