Market remains fundamentally undersupplied but recent lettings of speculatively constructed units show pent-up demand for good quality space
As predicted, activity in the Scottish Central Belt increased in 2024, reaching 1.04 million sq ft across six transactions. However, barriers continue to exist for new entrants to the market, as vacancy remains at record low levels of 2.08%. There are currently no units under construction, and occupiers seeking top-quality stock must either pursue build-to-suit (BTS) solutions or look for units under 100,000 sq ft, a segment that has continued to perform well.
Supply
The supply of warehouse space in Scotland for units over 100,000 sq ft now stands at 681,392 sq ft across three units. The largest unit currently available is Unit 1 Faulds Park in Gourock, comprising approximately 295,000 sq ft of grade B second-hand space.
When analysing the current supply by grade, there is now no vacant grade A space across Scotland following the recent letting of Westway 200, 41% of the vacant supply is second-hand grade B space, and 59% second-hand grade C space. Based on unit sizes, there is a single unit available within the 100,000–200,000 sq ft size band and two within the 200,000–300,000 sq ft size band.
As with the rest of the UK, many occupiers are increasingly concerned about rising power requirements to meet future energy needs and improve environmental performance. Savills suggests that many units over 100,000 sq ft could be considered obsolete due to their inability to accommodate these modern occupier requirements. Taking this into account, Savills has revised its rental growth predictions upwards, estimating a 3.9% per annum increase over the next five years in our baseline scenario.
Take-up
The predominant activity in Scotland revolves around smaller units, primarily due to the limited supply of good-quality spaces over 100,000 sq ft. In 2024, take-up reached 1.03 million sq ft across six transactions, representing a 90% increase compared to the levels seen in 2023. Availability constraints have hampered the take-up of high-quality units, despite clear occupier preference, 51% of space transacted in 2024 has been grade A speculatively developed space and 49% has been second-hand space.
The largest deal this year was J&D Pierce’s acquisition of 265,000 sq ft at Clydesdale Road in Bellshill, Savills acted for the vendor. In total, there have been three transactions within the 100,000–200,000 sq ft size band and three units transacted within the 200,000–300,000 sq ft size band.
Manufacturing-related occupiers accounted for 45% of total activity in 2024, followed by the other sector at 30% and third-party logistics firms and parcel companies, each at 12%.
Development pipeline
There has been no change in the development pipeline following the recent completion of two units in the past year. The most recently completed, Westway 200 in Renfrew, which provides 202,230 sq ft of grade A space, has now completed, underscoring sustained occupier demand in the region. Additionally, Savills is tracking approximately 450 acres at various stages in the planning process, which could provide BTS options.