Boom in demand for industrial space and logistics

Property experts have pointed to an “urgent” need for speculative industrial and logistics developmentinscotlandamid booming demand.

The warning came as new analysisbypropertyconsultancy Colliers highlighted strong demand for industrial space fromcompaniesacrossarange of sectors, partly as a result of changes brought about by the pandemic.

Thefirmpointedtothehealthcareandmedicalsectors,where large supplies of equipment have had to be made easily accessible to be moved around the country quickly.

A surge in online shopping as a result of lockdown measures has led to a jump in demand for storage, distribution and parcel delivery services, also adding to the need for additional space. Other sectors such as foodanddrink,engineeringand manufacturingarealsodriving demand for industrial accommodation, Colliers noted.

Thefirmexpectsaveragerents to grow at a “moderate” pace this year on the back of tight availability and robust occupier activity.

Iain Davidson, director of industrial and logistics at Colliers in Glasgow, said: “Coronavirus has had a devastating impact on many parts of the economy, but it has also driven up demand for industrial space across Scotland, which was already strong before the pandemic.

“I see leasing activity continuingtoincreasethisyear,ascompanies look to build more resilience into their supply chains.

“Businesses are adopting more localised strategies, while increasing capacity and efficiency. There is therefore an urgent need for speculative development in Scotland if this demand is to be met.”

He added: “The development market now appears to be responding to robust occupational demand, but it will be at least 2022 before most proposed schemes come on stream. Even then, in our opinion, the pipeline being suggested will be insufficient to meet currentandprojecteddemand.”

In the east of Scotland, the speculative development segment of the market has taken a slightly different path than the west, the research noted.

Lewis Pentland, associate director of industrial and logistics at Colliers in Edinburgh, said: “While there has been some speculative development activity in the east, this has been limited to smaller multilet estates.

“We are now witnessing a shortage from 20,000 square feetupwards.asaresult,weare seeingrentalgrowthinexisting stock, with builds likely to featuremoreprominentlyoverthe coming months.”

Areportlastweekfromfellow property advisor CBRE noted that Scotland’s industrial and logistics sector had seen solid take-up figures despite ongoing economic challenges.

Releasingitsmarketoverview on the industrial and logistics sector across Aberdeen, Edinburgh and Glasgow in 2020, the firm predicted significant growth this year, though development is “urgently” required to meet demand.

David Reid, associate director in CBRE Scotland’s industrial and logistics team, said: “The year ahead is anticipated tobringfocusonbuildingmore resilientsupplychains,increasing capacity and diversifying suppliers to safeguard against future disruptions.

"With Covid accelerating online demand for retail, we also predict increased demand for last mile logistics properties.”