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Occupier demand still below average in Scotland’s commercial property markets

The main findings from Ryden’s 69th Scottish Property Review (which covers towns and cities in Scotland) show:

• Occupier demand in Scotland’s commercial property markets remains below average, except once again in Aberdeen

• Development activity continues to be curtailed by lack of debt finance

• Investment property performance has re-connected with occupier markets and offers steady income but weak growth prospects

Economy

The UK and Scottish economies continue to perform well below trend, as the real economy struggles to recover from the banking-induced recession.

Offices

Glasgow and Edinburgh are once again achieving similar levels of office property take-up. Aberdeen continues to be the stand-out performer. The potential for a medium term correction in the office markets continues to increase, in the near-absence of new office development since 2008.

Industrial

Despite weathering the 2008-09 recession well, weak corporate confidence has led the industrial sector into a flat spot in 2011. Once again Aberdeen is the exception and continues to perform strongly.

Retail

Retailer confidence continues to be fragile as the consumer economy struggles to emerge from recession. Compounding this difficult occupier market, development activity remains weak due to the lack of debt finance available within the property market. These challenging conditions for the retail sector are likely to persist into the medium term.

Investment

Transactional activity continues to be limited in the Scottish property investment market, as wider economic uncertainty pervades the sector and affects confidence. Investor interest is in very specific areas and if strict criteria cannot be fulfilled, compromise does not appear to be an option.

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