Glasgow commercial property

A SLOW start to the year saw only £250 million transacted across Scotland’s commercial real estate market. This level is ...

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A SLOW start to the year saw only £250 million transacted across Scotland’s commercial real estate market. This level is significantly below the five-year quarterly average of £550 million states Colliers’ latest Scotland Snapshot.

The firm notes that the substantial outward shift in yields witnessed over the past few quarters is slowing and economic predictions have been upgraded since Q4 2022.

Oliver Kolodseike, director in the Research & Economics team at Colliers, comments: “2023 began where 2022 ended, with few deals and smaller lot sizes. However, it feels as if we are moving closer towards a turning point, with the Q1 Scottish Business Monitor showing improved sentiment. Since our Q4 Snapshot, Oxford Economics has revised its forecasts for Scottish GDP, expecting growth of 0.1 per cent this year, up from the 1 per cent decline previously forecasted.”

The largest retail deal by value in the first quarter was the £30 million sale of the Overgate Shopping Centre in Dundee to Frasers Group. Despite this, investment volumes in the sector only reached £100 million in Q1, 20 per cent below the five-year quarterly average. Five transactions were recorded in Edinburgh, whilst the £2.3 million sale of a Sainsbury’s Local on Argyle Street was the only sale in Glasgow during the quarter.

Industrial investment had its strongest quarter in 12 months, with volumes reaching £80 million in Q1, a significant jump from the £30 million recorded in Q4 2022. The largest deal was the £41 million sale of a seven-asset portfolio across Peterhead and Glenrothes, totalling 860,000 sq ft of warehouse space.

Iain Davidson, director in the Industrial & Logistics team in Scotland at Colliers, adds: “In both the occupational and investment markets, we are continuing to see a flight to quality, however the pressure on the levels of stock is impacting volumes. With high costs of construction and borrowing, there is little speculative activity taking place, and as such we don’t see there being a quick fix to help alleviate the pressure on the pipeline.”

Office investment volumes remained subdued in Q1, slowing from £90 million in Q4 to just over £70 million, around 65 per cent below the five-year quarterly average. Edinburgh recorded four transactions totalling £50 million, whilst activity was much more limited in both Aberdeen and Glasgow. The largest deal of the quarter was Capreon’s £37 million purchase of 133 Fountainbridge, an Edinburgh city centre complex of three office buildings.

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