Industrial Market Overview
In recent months the Industrial Market has maintained much of the momentum gained over the last few years, with continued steady rental growth, and high levels of demand, albeit investment yields have softened over the past 18 months.
A distinct lack of supply and availability of quality industrial stock continues to be the primary obstacle for occupiers. There are multiple reasons for the shortage of supply; lack of strategic sites for new development, inflation of construction costs and record low vacancy rates to name a few. Said lack of supply has been the catalyst for more refurbished product being offered to the market, with many speculative new build schemes having been put on hold.
Continued rental growth in the industrial sector has driven many occupiers to seek out options available to purchase, in an attempt to reduce overheads, however there is also a distinct lack of supply to the market of freehold options, as Landlords are more likely to hold and benefit from rental growth.
The overriding view at this point in time is that until the development of new build industrial assets and estates picks up pace, the second hand/ refurbished rental market will continue to go from strength to strength, whilst freehold options will be scarce and when they do become available, are likely to be very competitive.
Retail Market Overview
Growth in retail quoting rents across Glasgow has been positive in recent months, representing a more balanced, although healthier environment in comparison to the preceding years.
Competition on Buchanan Street is pushing prime Zone A rents back towards pre-pandemic levels. The void rate has decreased following a series of noteworthy lettings including Charlotte Tilbury, Mac, Lush, Pandora, and a TAG Heuer boutique.
Prime Zone A rents are currently at £300/sq.ft Zone A, helped by lower business rates which have ultimately reduced occupational costs. Footfall has also increased markedly.
Sizeable rent reductions have also been noted in the Merchant City beyond Ingram Street, which has become a location of choice for high-end fashion retailers in recent times.
Retail activity in secondary retailing streets in Glasgow is still strong, despite the recent economic troubles the entire UK economy has been suffering. Occupational demand for secondary retailing streets is buoyant. Tenants are still signing (on average) c10 years leases with breaks at year five. Tenants incentives have generally remained unchanged. We are witnessing rental growth on streets such as Byres Road and Great Western Road (Kelvinbridge area).
Graham + Sibbald is one of the UK’s leading property consultancy services. Starting in Dundee, Scotland in 1959, the firm has continued to expand with a total complement of 21 offices from London to Inverness, over 250 staff and offering over 20 different service lines. We may have grown but our knowledge is still unrivalled, we’re nationwide but local wise.
Please contact our Agents Tom Conway (tom.conway@g-s.co.uk) or Ryan Farrelly (ryan.farrelly@g-s.co.uk) for more information on the Commercial Property Sector in Glasgow or visit our website: www.g-s.co.uk
