Take-up of large industrial and logistics space hit a record high in the first half of 2020 despite the pandemic, according to real estate firm Savills.
The firm’s latest Big Shed Briefing reports leases of properties of more than 100,000 sq ft totalled 704,531 sq ft across four transactions.
That was a 165% increase on the long-term first half average and 95% increase on the first half of 2019.
The deals included Iceland committing to 284,000 sq ft on Houston Industrial Estate in Livingston; Stanford Logistics agreeing to 122,575 sq ft at Titan Eurocentral in Motherwell; and Hewlett Packard Enterprise signing a new lease on 170,956 sq ft at HP Erksine in Bishopton.
Savills said all of the deals concluded involved second-hand units, with no new speculatively developed units available in Scotland. Supply fell by 9% from the end of 2019 to 1.34 million sq ft across nine separate units, just 12% of it Grade A quality.
Ross Sinclair, director in the industrial team at Savills in Glasgow, said: “Take-up continues to be constrained by both shortages in the size and quality of available units throughout the region with occupiers having to settle for lower quality options to satisfy their requirements.
“With no sign of speculatively developed units over 100,000 sq ft in Scotland, ongoing demand and the resulting decline in supply will keep the vacancy rate low in the short to medium term and push rents up.
“The bread and butter of Scotland’s industrial sector continues to be smaller, sub-100,000 sq ft units, and this end of the market has seen a game of two halves with Q1 being extremely active, and Q2 significantly hampered by Covid-19. However as restrictions lift, we have experienced strong levels of enquiries similar to the start of the year. The shortage of new space will continue to bring reduced incentives and positive rental growth.”
UK-wide, Savills reported 22.4 million sq ft of take-up of industrial & logistics space over 100,000 sq ft, 66% above the long-term average. Of that, 43% involved online retailers, with Amazon alone accounting for up to 84%.
Third-party logistics (3PLs) accounted for 15%, many undertaking contracts for the NHS. A further 11% were short-term lease agreements as a result of Covid-19, including space to hold excess stock by retailers with a dominant high street presence.