Despite the number of empty shops in Scotland reaching a two-year high, the country’s commercial property market is well on the road to recovery.
According to the Scottish Retail Consortium just over 11 per cent of retail premises north of the border are now vacant, bringing it into line with the UK average. And although retail sales got a 2 per cent boost in October the number of shoppers fell by almost three per cent on last year.
“Retailers will be hoping that seasonal momentum will help lift these figures into more positive territory next month,” commented SRC director Fiona Moriarty. “There’s clearly some uncertainty and cause for concern, especially so close to Christmas.”
Appreciating the retail pessimism, this year’s Scottish Property Review reassuringly promises better times ahead. Agreeing with the consortium figures, it claims there is strong evidence that the number of retailers going into administration has now slowed after its record 2012 high. While many smaller retailers are still struggling, value retailers — Poundworld and Poundland, B & M and Home Bargains — are expanding and actively looking for new sites.
“Most new retail and leisure developments are concentrated mainly in Glasgow’s shopping malls,” explained Dr Mark Robertson in the review’s introduction. “For the majority of other locations there will be a gradual reduction in vacancy and stable rents will be the measure of success.”
Published by Ryden, the Scottish property consultants and chartered surveyors, the review claims: “Economic growth has gained significant traction during 2013 and appears to have become established across all sectors … making it less likely to be a false dawn for the Scottish economy.”
The demand for office space in Scotland’s three largest cities — both for sales and to let — continued to rise, with Aberdeen’s strong demand continually suppressed only by a shortage of supply. A number of Glasgow developments are underway, but the lack of Edinburgh office projects has yet again “frustrated the market”.
Most areas of Scotland have benefited from this year’s improved business confidence, adds the review. The industrial property market is on the cusp of more sustained activity, it adds, which raises the possibility that a lack of suitable developments may become more of a concern than lack of demand.
“Activity in the industrial investment sector remains selective,” says the review. “Cautious optimism is the prevailing sentiment, which is an improvement on the previous extreme caution. Investors are beginning to relax in a more positive and active approach.” As ever, institutions continue to buy up most large commercial sites.
Overall, investment in property is expected to be “significant” during the coming six months, with Ryden predicting a “rising confidence from occupiers, limited growth in supply and a more positive outlook for the economy continuing to accelerate property recovery. The weight of money in the market will continue to seek suitable outlets,” it adds, “but the lack of suitable stock will inevitably widen requirements and force compromise.”
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