http://www.insider.co.uk March 2020 INSIDER 99PROPERTY: COMMERCIAL
T
HE NEW decade has begun
with noticeably increased
optimism for offices and
commercial property. “We
are already seeing signs 2020 could
be a great year,” says Alasdair Steele,
head of Scotland commercial at
Knight Frank.
“Investors are coming back to
the market now there is some
much-needed political stability. We
have had interest from a range of
international sources, including some
buyers who would be new to the
Scottish market. Inevitably there will
be some bumps in the road ahead
as Brexit begins to take shape but,
for now, there is a real window of
opportunity emerging and we expect
trading volumes to pick up in the first
half of 2020.”
Edinburgh offices were “the stand-
out asset class” last year, more than
70 per cent up from £284m to
£484m. By June Edinburgh office
investment had outperformed the
whole of 2018. “The proportion
of buyers from overseas is at
historic highs, with more than
half of investment coming from
international sources and the
majority of deals being concluded
off-market.”
Nick White, director at real estate
advisors CuthbertWhite, believes
“much of the uncertainty in the UK
property market has been lifted”
following the election result.
“What this means is renewed
confidence in the investment markets
and a willingness for property
owners to consider sales given the
greater depth of potential buyers now
available, low cost of debt finance,
potential reduction in interest rates
and a potent mix of institutional and
foreign capital seeking well-located
assets with strong reversionary
potential as rents are set to increase.”
Elliot Cassels, director of Capital
Markets at Colliers International
in Edinburgh, points to foreign
investors accounting for 56 per cent
of all Scottish commercial property
transactions last year. “Overseas
investors spent £1.1bn in 2019, the
second-highest figure on record,”
with the office sector itself attracting
£747m, above the 10-year average
of £675m.
This was echoed by CBRE, looking
at the final quarter of last year
when Glasgow office take-up was
248,207 sq ft, just more than 12
per cent higher than the five-year
Q4 average. Grade A supply levelsremain critical at just 6,000 sq ft, with
the vacancy rate down from 4.1 to
0.4 per cent on Q4 the year before.
Ben Reed, director at JLL in
Edinburgh, expects “the market
to pick up and for more occupier
decisions to be made more quickly”.
There was a 45 per cent rise in
re-gears as occupiers chose to stay
put rather than relocate. His office
colleague Craig Watson predicts
“a more energised market with
sustainability and technological
advances becoming more prevalent
for both occupiers and landlords”.
Their Glasgow colleague, Alistair
Reid, also sees “decisions being made
more readily, which will also be
helped by much-needed new stock
hitting the market”.The Royal Institution of Chartered
Surveyors reports a net balance of
38 per cent of Scottish surveyors
expecting commercial rents and
capital values to rise this year, led by
the office and industrial sectors.
Real estate services firm Avison
Young predicts strong occupational
office demand in Glasgow and
strong overseas investor activity
in Edinburgh, where reduced
availability is lifting out-of-town
take-up.
Knight Property Group went out
of town to add to its Edinburgh
portfolio, purchasing 4-5 Lochside
Avenue in Edinburgh Park from
a pension fund client of LaSalle
Investment Management. The
current lease ends this month and
Knight intends to refurbish it with
space coming back on the market
early next year.
Avison Young itself began 2020
with three deals in Glasgow, helping
renewable energy recruiters Taylor
Hopkinson take a 3,832 sq ft office
suite in 58 Waterloo Street and
an insurance company acquireBy FRANCIS SHENNANOVERSEAS BUYERS LEAD
THE WAY IN ‘WINDOW
OF OPPORTUNITY’
[I expect] the market to pick up and
for more occupier decisions to be
made more quickly Ben Reed, JLL (below)
177 Bothwell Street, Glasgow is
scheduled for completion next year