Scotland’s industrial and logistics market is thriving and there’s a real breadth and depth to occupier demand from across a variety of sectors. But, with the dearth in availability of good quality industrial and logistics space combined with a lack of development activity over the last 10-15 years, demand is now beginning to far outstrip supply. Ross Jubin, Investment and Development Consultant for Scarborough Group International, explains.
One sector which has seen a significant boom in activity in the last 18 months is e-commerce, with operators such as Amazon and Hermes accounting for a significant number of big box (100,000 sq ft plus) lettings.
However, across the central belt of Scotland, availability is sitting at around 5% below the average which, aside from driving rental growth and yield compression, has the potential to stymie further occupier activity, particularly for these larger requirements. With further complications to lead-in times resulting from Covid and Brexit, occupiers now need to plan their real estate strategy further in advance to mitigate these risks.
That said, land values across the central belt of Scotland are still relatively low compared with the UK average, meaning that conditions are now ripe for pre-let activity and speculative development.
Positioned to capitalise
Queensferry One, our 120-acre brownfield site in Rosyth that we are developing in partnership with Muir Group, is well positioned to capitalise on these changing market conditions.
Occupying an unrivalled location alongside the Queensferry Crossing and M90 motorway, Queensferry One provides immediate road access to the whole of Central Scotland and beyond. The site also benefits from excellent public transport links allowing connectivity between local areas and the main cities of Edinburgh and Glasgow, and nearby Inverkeithing train station is on the main east coastline providing a fast service to and from London and Aberdeen.
The site’s frontage onto the Firth of Forth and adjoining deep water port, operated by Forth Ports and Babcock, is ideal for manufacturing occupiers looking for alternative shipping solutions for goods unsuitable for transport by rail, road or air.
Primed for action
In the 20 years since we acquired the site, we have delivered around 250,000 sq ft of offices and provided around 30 acres of serviced development plots for smaller sub-100,000 sq ft requirements.
However, a former Ministry of Defence oil fuel depot, part of the site featured a number of above ground oil tanks connected by large underground concrete pipes, and a 10-acre, bomb-proof concrete bunker that held fuel for the ships at Rosyth, which required remediation. With remediation works now complete, we have unlocked the remaining 90 acres of land which is capable of delivering up to 1m sq ft of industrial and logistics space, making it one the largest development sites in the central belt of Scotland.
Its shovel-ready status will be a major advantage to occupiers looking to relocate in the short-to-medium term, particularly against the backdrop of increasing materials and labour supply shortages and sluggish planning system, reducing much of the time, unpredictability and financial risk from a development project.
Another key factor underpinning market activity is ESG, not only in the growth of demand from occupiers in sectors such as renewable energy, but also individual business objectives influencing property requirements.
As occupiers look to realise targets of becoming carbon neutral over the next 20-30 years, it will undoubtedly force them to consider the quality of their existing premises. Older buildings are incredibly inefficient, whereas new build premises can be optimised for zero or minimal carbon output in every aspect from construction to operation.
Equally, when occupiers start prioritising ESG requirements in buildings, investors will follow suit and therefore prioritise assets with strong ESG credentials.
At Queensferry One we have the ability to maximise the synergies between occupiers and create a real hub for clean, green buildings and occupiers, whether through the delivery of large-scale BREEAM Excellent buildings, renewable energy sources, or electric charging for cleaner transportation.