THE coronavirus pandemic has partly set the agenda for commercial property in Scotland in 2021 with logistics sites set for significant growth as deliveries of all description become a more prominent part in business and in consumers’ lives.
A Covid element to office wellness is also expected to be more sough- after as the vaccine programmes progress and people return to work on a more permanent basis, it is suggested.
Stephen Lewis, managing director of HFD Property Group, the firm behind what is set to be Glasgow’s largest single office, in Bothwell Street, has said high-spec working environments will be a key attraction as the city reopens in the weeks and months ahead.
“We’ve been very fortunate and pretty resilient,” he said. “Our main out-of-town business, Strathclyde Business Park and Hamilton International Park, which is where the majority of our serviced office space is, has actually held up pretty well which is all really as a result of the flexibility that that space provides.
“The demand for flexibility has been there for some time and continued through the pandemic so thankfully the impact on our out-of-town business has been pretty minimal and if you looked across the board for the year our occupancy is probably slightly higher at the end of the year than it was at the start of the year, which is a very fortunate position to be in.”
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He said the overall take-up figures for Glasgow city centre "is significantly down in the five or 10 year average".
He said the firm expects demand to be reduced by between 10-20 per cent in the short to medium-term.
“You have to view that in the context that Covid has super-accelerated the trends that were already there.
“Home working is here to stay, but it won’t be five days a week. For the majority, it will be the minority (of the time) and again that was here already so that trend has just continued.
“The counter to that slight reduction in demand will be a flight to quality.
“We certainly see demand for space again meets those trends that were here pre-Covid, whether that is sustainability and the push to net zero, wellness, and now including the Covid element of wellness, and flexibility in terms of growth and tenure."
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Mr Lewis said: “All those things will continue and are being accelerated.
“In a way I guess people will take slightly less space but better space, and that’s not a bad thing.”
John Rae, head of Knight Frank’s Glasgow office, also said the firm was resilient during the pandemic with deals “small in number but large in size” and pointed to logistics growth and the boost the vaccine is expected to give to the return to offices.
“We’ve done okay, we’ve been involved in some sizeable deals, but not a huge amount of deals,” he said.
“The industrial sector is hot and the reasons for that are pretty obvious. The way we shop now all hinges round last-mile logistics like DPD and Amazon so it is understandable why industrial has become so popular.
“However, when something becomes popular it becomes expensive and it is now hard for people to get what they want in industrial in terms of stock pricing."
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He said: “If that becomes too expensive and people can’t get their returns there they are going to have to look elsewhere.”
CBRE also said it expects investment and take-up into the office sector to recover in 2021 while for the logistics sector, the pandemic has “evidenced its essential role of keeping food and goods moving”, adding: "Restructuring logistics networks will require additional modern warehouse space in the UK and in relation to Scotland should result in funding being made available for speculative development.”
David Reid, of CBRE Scotland’s industrial and logistics team, said that there was “incredible take-up” during 2020 but it has left critically low stock levels.
“We are working with a number of developers to plug this shortfall in supply,” he said.
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