The largest industrial letting in Scotland this year has seen a packaging firm take 120,000 sq. ft. in the outskirts of Glasgow.
Fast-growing Scottish firm the UPAC Group has signed a 15-year lease to let the site, on Barfillan Drive, Cardonald. Leading commercial property advisory GVA acted on behalf of the landlord, John R Adam & Sons Limited. GVA say the deal is a sign of the good health of the industrial market this year.
Craig Semple, Associate at GVA, said: "This is not only Scotland's largest industrial letting of 2017, it's also one of the most significant in what has been a strong year for the market across all size ranges. Prime industrial rents in Glasgow have increased by as much as £2 per sq. ft, rising from £6 to £8."
The Barfillan Drive site was originally a 200,000 sq. ft. facility but GVA anticipated it would be difficult to market due to a lack of yard space and tight boundary. To create a yard space GVA advised the landlord to demolish the west side of the complex, which was in poor condition and amounted to approximately half the total sq. ft. This allowed a large secure yard space to be created as well as a 120,000 sq. ft. unit featuring a two-storey office and sizable car park.
Mr. Semple said: "Not many agents would recommend the demolition of almost 100,000 sq. ft. and the landlord deserves a lot of credit for taking our advice and adopting what could be viewed as a high-risk strategy. The landlord further invested in redesigning the unit, but in this instance it significantly enhanced the viability of the site and thus the letting prospects. Watson's were the first party to view this site and the long-term lease shows they feel it will serve as an excellent base for future growth."
Speculative industrial development has returned to the Scottish market this year and GVA believes there is a strong pipeline that will continue into 2018.
Mr. Semple added: "Businesses across the UK are interested in Scotland again thanks to a relatively settled business environment compared to previous years. However, it's still hard to see developers in Scotland having the confidence to speculatively build a warehouse, distribution facility, research campus or manufacturing plant above 50,000 sq. ft.
"Whilst pre-lets of 100,000 sq. ft. are secured fairly regularly in the Midlands in England, developments of this scale are deemed too high-risk in Scotland. Unfortunately, only more deals at this level will allay those fears but with a lack of availability in this size range, it's a Catch-22."
"There is an appetite from inward investors for large scale industrial accommodation, yet availability in this size range is extremely limited and GVA are aware of at least three occupiers seeking accommodation of a similar size to this site with their own bespoke specifications."