Speculative office development grinds to halt

Edinburgh's central financial district

Speculative office development in Scotland has ground to a halt again — except selected schemes in Edinburgh, where vacancy continues to fall — according to Ryden’s  81st Scottish Property Review.

The Review provides detailed analysis of how office, industrial, retail and investment property has fared over the past six months in Scotland.

The report said Edinburgh’s “rapid re-use of obsolete offices for alternative uses is a market that Glasgow is gradually adapting to, and Aberdeen must develop soon.”

It continued: “In Central Scotland the industrial property market is reported as an overnight success story, 30 years in the making, with high occupancy rates and rising prime rents.

“However, further north, Aberdeen’s market is challenged by the offshore industry and the city has no speculative industrial development underway for the first time in many years.

“The sentiment within the commercial property industry has also been shaped this year by good news on business rates.

“From April 2018 new build property will not pay any rates until occupied for the first time, then the occupier will benefit from a first year without rates.

“The details of this are to be included in the Scottish Government’s December budget.”

Mark Robertson, partner at Ryden and editor of the Scottish Property Review, said: “Investor confidence is rapidly returning to Scotland’s commercial property sector, with Glasgow and Edinburgh benefiting most.

“We are seeing foreign investors at the forefront of activity again, taking advantage of the weak pound.

“Improving occupier demand and a tightening of the supply of prime properties has also contributed to an upturn in investor demand.

“We’ve seen several large property deals conclude over the past six months.

“Although UK Funds largely remain cautious, Scotland can offer relatively good pricing with strong market fundamentals.”