LACK of industrial development is delaying inward investment decisions and could mean Scotland losing out on jobs as companies re-direct their projects elsewhere, according to a new report from property advisers Ryden.

Industrial property enquiries in the Central Belt have increased sharply post-referendum and a steady rise in demand, coupled with the drop in supply of modern space, is predicted to lead to rental growth and reduced tenant incentives.

But prime rent levels, currently around £7.50 per sq ft, are not high enough to make the finances stack up for speculative new build, and the development industry has yet to provide a meaningful response.

Net take-up for Greater Glasgow over the past 12 months was 2.6 million sq ft, but within the city boundary a lot of the property is older engineering space and the constrained supply of modern alternatives means deals will flow elsewhere.

Leading estates like the IO centre at Glasgow Business Park are now fully let. The true vacancy figure for Glasgow is estimated at four per cent once off-pitch and obsolete properties are stripped out, and the availability figure for prime property around one per cent.

Loss of industrial land to higher value uses such as residential and retail has added to the decline, and Ryden says the lack of Grade A product is worst in the key market size of 15,000 to 50,000 sq ft. The vast majority of industrial units going up in recent years have only been small scale.

Rockspring is currently considering two speculative schemes at Queenslie, but the largest space, created by combining two of the planned units, would be just 12,000 sq ft.

Most developers have taken the safer route of waiting until they secure a pre-letting or design and build project - like the large new Co-operative and Brakes distribution warehouses at Newhouse - before committing on site. A further problem is that contract-led requirements often have short-lead times - from identifying the need to an operational date - leading to some occupiers preferring existing facilities.

Stark market dynamics should lead to an active development market but there remains little activity up here, with the Scottish market reckoned to be two years behind the upturn in England.

The picture is not all bleak, however.Scottish Enterprise does report strong interest from occupiers for sites at Eurocentral and Gartcosh in Lanarkshire.

At Gartcosh, Fusion Assets has already completed advanced infrastructure works, financed through the Scottish Government's vacant and derelict land fund, to create a development ready site.

But the arms length property development company of North Lanarkshire Council is still seeking a joint venture partner to develop out its speculative industrial scheme, where planning consent has been secured for three units totalling 60,000 sq ft.

Murray Collins, Fusion's managing director, said this was a high profile site and its strategic location on the M73 should prove ideal for logistics and distribution.

"The site has been fully remediated and serviced, and a new access road created. The development of the first phase of Gartcosh Industrial Park is intended to kick-start the regeneration of the overall site and we are committed to identifying a development partner with the right credentials to help us take this project forward."

Colliers International industrial director Iain Davidson said that, with millions of pounds already invested by both SE and North Lanarkshire Council, the former strip mill and steel works at Gartcosh boasted a prime location and its own four-way motorway junction: "There is strong demand for larger modern industrial premises and a dearth of supply, and we expect good tenant interest in the proposed development."

Another ray of hope in Lanarkshire should get under way later this year at Belgrave Point, Bellshill, where

J Smart & Co is planning a start on an 80,000 sq ft project. This largely self-funded developer has been one of the few to continue through the recession, with successful high specification schemes in Edinburgh and Bathgate.

Eastpoint's refurbishment of the nearby former Innovation Park office scheme back into industrial is well under way, with terms issued on 50 per cent of the space being created.