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Regional Focus
Scotland
egi.co.uk EG 00 Month 2021 59
Regional Focus: Scotland
across Scotland – in part due to
Scotland readies Glasgow hosting the UN’s COP26
conference in November. While the
reopening
city and the surrounding area have
pledged to plant 18 million trees,
the North of Scotland Hydrogen
Programme is planning a ‘green
Is the country heading towards a sharp hydrogen’ hub in the Highlands as
recovery in coming months? an alternative to fossil fuels.
The transition to cleaner energy
A
s we approach festival parliament, Nicola Sturgeon argued will not be straightforward, and
season in Edinburgh – the a vote on Scotland’s future is “the recently released data showed that
UK’s festival capital – the will of the people”. However, the UK Scotland missed its greenhouse gas
city has the difficult task of coming government will likely continue to reduction targets in 2019. Regional
to terms with its future. What lasting oppose a referendum at least until airline Loganair got involved in
impact will the pandemic have on the next general election. the green transition, adding £1 to
the Scottish capital’s buzzing arts ticket prices to invest in sustainable
and performance scene? The major Time for recovery technology. The airline will soon
festivals – Fringe, the Edinburgh Getting through the final months begin trialling planes powered by
International Festival and the of lockdown will hopefully lead hydrogen and renewable electricity.
International Book Festival – have to a strong economic rebound
had to scale down their ambitions in Scotland, several reports have Scotland’s changing landscape
this year, and some events that were argued in recent months. Demos- A number of major developments
supposed to go ahead despite the PwC’s Good Growth for Cities report have recently started and
pandemic have had to be shelved. in January revealed grim figures completed, the most significant of
about Glasgow’s economy shrinking which is Edinburgh’s £1bn St James
But Scotland’s restrictions are easing by 10.4% last year – the largest Quarter shopping centre, opened
and, at the time of writing, it looks as contraction among Scotland’s near the end of June.
if some form of normality will resume cities – but it also forecast a quicker
on 9 August. There have been recovery than in Edinburgh. In West Lothian, Amber REI has
delays along the way, and places like lodged plans for a development
Glasgow have had to put up with To aid recovery, Scotland extended of 1,800 low-carbon homes, while
restrictions longer than surrounding business rates relief in February to Moda is underway on a 433-home
areas due to rising cases. the end of the 2021/22 financial build-to-rent scheme in Glasgow
year, while the cultural sector will and Edinburgh City Council is on the
Overall, however, the Scottish receive emergency funding. In other hunt for a development partner for its
government has shored up public welcome news for the country’s 600-home Meadowbank masterplan.
opinion of its handling of the industries, the US suspended tariffs
crisis. Broad support propelled the on Scotch whisky, which had caused With these and other projects now
Scottish National Party to its fourth £500m of losses since 2019. In June, coming out of the ground and the
consecutive victory in this year’s KPMG forecast 6.4% GDP growth world’s attention turning to Glasgow
elections, missing out on an overall for Scotland in 2021, driven by the in the coming months, Scotland
majority in Holyrood by only one seat. lifting of restrictions and growth in is grappling with its future. It’s not
manufacturing and oil and gas. just the pandemic: developments
The results thrust the question in Scotland’s politics, industry,
of independence back into Although the recovery will be in economy and technology are
the spotlight: with the pro- part led by the oil and gas industry, setting the scene for a swathe of
independence SNP and Green renewable energy and climate debates about life and work after
Party scooping up a majority in change have taken centre stage the pandemic. n
Regional Focus: Scotland
As occupiers and investors widen their search for commercial space around the UK,
Scotland has the potential to make gains across most sectors. But how much has interest
grown in the country’s largest cities, and how do they stack up against each other?
T
hree of Scotland’s largest The exception to this trend is Edinburgh rallies – but Glasgow is
cities have been drawing offices, where the three cities’ the place to be
more attention from the combined enquiries accounted for While office enquiries fell in
industry since the start of 2020 a smaller percentage of the total so Glasgow, they picked up significantly
across several sectors. Glasgow, far in 2021 (2.7%) than at the same in the Scottish capital. There were
Edinburgh and Aberdeen’s leisure point in 2020 (3.4%). In fact, office 23% more searches for office space
enquiries accounted for 4.1% of enquiries in Glasgow were down 13% in Edinburgh than in Glasgow in Q1
the UK total in April 2021 (falling in Q1 2021 compared to the same 2021 – a stark contrast to the start
slightly to 3.9% in May), compared period in 2020 and they have fallen of 2020 when the capital had 40%
to 2.1% at the start of last year. further since March. As in the rest fewer searches than its Lanarkshire
Retail (+0.9% points) and industrial of the UK, the hunt for offices has counterpart.
(+0.4% points) were also up by the either stalled or shifted out of the
same metric, but not by as much. largest markets. However, it was retail that grew
most in Edinburgh (up as much
Aberdeen, Edinburgh and Glasgow enquiries as a percentage of UK total as 226% at the start of the year
n offices n leisure
compared to January 2020).
5%
Although there was a dip in March
and April, enquiries rebounded
4% in May in line with the easing of
% of total UK enquiries
restrictions – a rebound that did
3% not happen in Glasgow where strict
lockdown rules remained in place
longer due to a rise in cases.
2%
As Scotland’s largest city, however,
1%
Jan 20 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 21 Feb Mar Apr May Glasgow still accounts for
significantly more interest from
Source: EG Propertylink
the industry than Edinburgh or
Change in enquiries: Edinburgh v Glasgow Aberdeen.
n Edinburgh offices n Glasgow retail n Edinburgh offices n Glasgow offices
250%
Although industrial remains the
200% city’s biggest sector, leisure has
% change since January 2020
150% experienced the sharpest rise in
enquiries so far this year – up 363%
100%
on the first five months of 2020.
50%
Leisure enquiries across the UK rose
0% by ‘only’ 111% in that same period. In
-50% that way, Glasgow has taken two of
the nationwide trends this year – a
-100%
Jan 20 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 21 Feb Mar Apr May relative fall in office interest and a
Source: EG Propertylink rise in leisure – to the extreme. n
Regional Focus: Scotland
Occupiers go was particularly active with 34
deals averaging £6.2m, which was
shopping the highest average investment
in Scotland since at least 2013.
Compared to that, the start of this
year has been quieter despite a
Retail had an upbeat start to 2021, but similar number of deals in Q1 (32).
what about the other sectors? With an average deal size of £1.2m,
the quarter’s total came to just £39m,
a fall of 81% on the previous quarter.
Offices of Q3 2020, when investment
Office take-up and investment totalled £200m across Scotland. At the time of writing in late June,
were both down considerably in More than half of the total came Q2 had registered only £5.5m of
Scotland as a whole and in its main from Hyundai Asset Management’s industrial investment, which is the
cities in the last year: there was a £133m acquisition of 1-3 Lochside second lowest total for a quarter
61% fall in take-up from January to Crescent in Edinburgh. Since Q3 since at least 2013 after Q2 2020
May 2021 compared to the same 2020, EG Radius has recorded just (£5.2m).
period last year. EG Radius recorded £92m of investment in total across
just 408,000 sq ft of lettings from Scotland’s office sector. Retail and leisure
January to May, compared to 1m sq Retail take-up was up 9%, year-on-
ft in January-May 2020. Industrial year, in the first five months of 2021.
Scotland’s industrial sector had an The sector had one dismal quarter
Among the largest cities, Aberdeen exceptional year in 2020: quarterly last year (Q2 when total take-up
experienced the sharpest fall at take-up didn’t fall below the five- came to 122,882 sq ft after a 70%
-82% on the first five months of year quarterly average of 1.3m sq ft fall on the previous quarter). Since
2020. This was partly exacerbated at any point. In fact, the period from then, take-up volumes have held
by the city actually recording a 54% January-May 2020 showed a 46% up, averaging about 400,000 sq ft
uptick in take-up last year with increase in take-up on the same per quarter across Scotland in the
more lettings than in 2018 or 2019. period in 2019. following nine months.
Glasgow remains Scotland’s most EG Radius has yet to register deals However, activity appeared to
active office market, accounting reaching anywhere near those levels stutter again in Q2 2021. By June,
for 39% of lettings in the country. in 2021. Industrial lettings in the first the sector had only recorded
The last time Edinburgh recorded five months came to just 809,000 89,000 sq ft of lettings. Investment
more office take-up than Glasgow sq ft – a 71% year-on-year fall, and has similarly been low this year,
was in 2017, a year boosted by a 62% decrease on the five-year totalling just £27.4m – less than in
the Government Property Unit’s average. Q3 or Q4 in 2020, which recorded a
190,000 sq ft letting in New combined total of £79.8m in retail
Waverley. Industrial investment dried up investment.
between Q1 and Q3 2020, but then
Recent months have seen a dearth picked up again in Q4 2020 and The road to back to the pre-2020
of investment, with the exception Q1 2021. The last quarter of 2020 five-year average of £136m perRegional Focus: Scotland
Office take-up in Scotland by location (Jan-May)
quarter seems like a long one.
n Edinburgh n Aberdeen n Glasgow n Other
100% The emergence of another wave
of Covid cases and a delay to
80% reopening have left the sector with
question marks hanging over its
60% future. But if a fast recovery does
% of take-up
follow a sharp downturn, we should
40% be able to see the first signs of that
in August as restrictions ease.
20%
Residential
0% Scotland’s build-to-rent market
2013 2014 2015 2016 2017 2018 2019 2020 2020 has yet to explode in the way it
Source: EG Radius
has in other parts of the UK. As
Industrial take-up in Scotland Jan-May, 2013-2021 EG’s recent BTR report showed,
3.0 Glasgow and Edinburgh have
accounted for just 8% of deals
2.5 between them. Still, there have
been a number of notable deals in
Take-up (m sq ft)
2.0
recent months. Apache & Harrison
1.5
Street’s £100m acquisition of
Holland Park, Moda Living’s 433-
1.0 home development, was the fifth
largest BTR deal in the UK in Q1. A
0.5
few months earlier, Legal & General
agreed to buy the 346-home
0.0
2013 2014 2015 2016 2017 2018 2019 2020 2021 Candleriggs Square development in
Source: EG Radius Glasgow for £81.5m. nCustomer spotlight: Graham + Sibbald
Bilal Ashraf,
Associate Partner at
Graham + Sibbald
We sat down with Bilal Ashraf, associate partner at Graham + Sibbald,
to discuss how the company has had to adapt, expectations for the
market and permanent changes for the industry
In such challenging times, what
are the top three imperatives
that your team are focused on to
support your clients?
Covid-19 brought many challenges
in terms of client relationships. The
halt on meeting clients face-to-
face was the toughest of them all.
However, I would say the top three
things that the team at Graham +
Sibbald focused on were:
Communication. We had to adapt
our communication methods to
keep our clients informed. We used
Zoom and Teams calls to “meet”
clients face-to-face, and our
teams also used both methods to
communicate between our offices
throughout Scotland and England.
This allowed us to keep our clients
in the know about the market, how
it was changing throughout the
pandemic, and allowed us to keep
clients updated on their instructions
on a more personal level and
provide the highest standard of
service to them at all times.
Instructions. With lockdown, the
team had to adapt the traditional
way of receiving instructions and
Bilal Ashraf
offering advice. With challengesCustomer spotlight: Graham + Sibbald
such as closure of offices/retail business moving and providing the more widespread implementation
premises, the team had to be on highest service to all our clients. of working from home and in
hand to offer any advice necessary Another lesson was ensuring some instances reducing space
to our clients. With restrictions in employees’ and clients’ safety. We requirements.
place and inspections not allowed, had to adapt our offices and make
the team had to use online systems sure we had safety protocols in As the concentration into prime
and previous files to undertake any place for any employees who could industrial locations is intensified by
new instructions. EG was a great not work from home and for any the increase in online shopping and
tool to have in this situation as it clients attending the office. Now services, I think the industrial sector
allowed the team to pull as much restrictions are lifting, employee will remain buoyant and rents and
data as possible on instructions. safety is still paramount. Safety yields will sharpen.
In terms of agency and the agency protocols remain in place for all our
team, a lot of matters had to be offices and working from home is The retail market over the next six
focused on. With restrictions in still very much a priority. months will see slow take-up and
place and viewings not being carried I think, for Edinburgh, this will take
out, the team adapted to offering What are your expectations for longer to recover due to the move
video tours to keep our clients’ the Edinburgh market as we come to more e-commerce services. The
properties marketed to the highest out of lockdown over the next six new St James, which opens this
of standards. This allowed the months? summer, will provide a lift for the
market and property transactions The Covid crisis definitely had a sector, but retail was the hardest
to keep moving in these challenging significant impact on the property hit throughout the pandemic and
times. sector. There was a caution brought recovery will remain measured.
to the Edinburgh market by the
Support. The team reached out pandemic. There was a slowdown in The property investment market has
with support for our clients, rather transactions in the retail and office picked up again and should grow
than with marketing. The pandemic sectors, but the industrial sector over the next six months. However,
was a challenging time for everyone, remained buoyant. I think investors will have more of a
from landlord to tenants. The team focus on off-market deals for good
was on hand to deal with issues Office take-up slowed during quality properties which are well-let.
that arose from the pandemic in the lockdowns as occupier
terms of providing property advice requirements were postponed or I expect the property market
across all areas of the business, adjusted. However, saying this, recovery in Scotland will follow
and especially through property Edinburgh saw it largest ever prelet a slow path to normalisation,
management. office deals, with Baillie Gifford especially in the office and retail
taking space (280,000 sq ft) in the sectors, as restrictions are slowly
What lessons has Graham & new Haymarket development. As lifted. However, a full recovery to
Sibbald learnt from this crisis and restrictions are beginning to be pre-2020 market activity levels will
how has your business changed in lifted, I think the next six months take more than six months.
the past 12 months? will see occupiers plan a return to
I think the biggest lesson we the office, which should signal an What are you your expectations
have learnt from the crisis is that office market recovery, albeit with for the Manchester market over
people can work from anywhere the next six months?
Real estate data EG
“
with the right tools and software During the pandemic, Manchester
in place. Our systems allowed us provides has helped showed resilience through its robust
to work from home very quickly in drawing up reports and office, retail and industrial sectors
and efficiently without any issues, keeping up to date with the and I have no doubt that in the next
enabling our teams to keep the most recent transactions. six months Manchester shouldCustomer spotlight: Graham + Sibbald
recover as restrictions are eased and The property market in particularly proud of, or working
confidence is restored in the market.
“ Scotland will follow a
slow path to normalisation,
towards, please do share.
At Graham + Sibbald we are proud
The investment market in especially in the office and to be at the forefront of an ever-
Manchester remained strong retail sectors, as restrictions changing property sector. We trade
throughout 2020 and traded higher are slowly lifted. However, as a traditional partnership as we
than in 2019, according to reports, a full recovery to pre-2020 consider that this best reflects
which shows there is a lack of market activity levels will take our commitment to provide safe,
stock within the market. Over the more than six months.” reliable and trusted advice and
next six months, as restrictions are support. We embrace change and
lifted, we would expect an increase In the retail sector, while lockdown focus on developing and providing
demand for the best assets and and restrictions created serious creative solutions that deliver the
prime locations from local and challenges, I think that in the best possible outcomes. We are
overseas investors, which will see medium- and long-term people committed to growing our business
demand increase and rents and will want to get back to socialising, to better serve our clients, through
yields sharpen. The argument around shopping and being together, strategic investment and alliances
the future of the office is likely to and the Manchester retail sector and through the expansion of our
lead to an increase in overall stock should bounce back at steadier core and specialist services. As one
levels, both occupationally and for pace compared to the office and of the most respected property
investors and we should see this industrial sectors as the transition of services companies throughout
more in the secondary markets. retail continues online. Scotland and England, we offer
The North West industrial market a unique combination of local
continued to stand out as one of the As you navigate the market this knowledge and national reach.
most sought-after throughout the year, how have you benefited from Our network of offices covers the
pandemic. We expect demand for using EG Radius? country, with all our teams sharing
industrial assets to remain strong EG Radius has been great, allowing expertise and resources so that they
over the next six months and going our teams to keep up to date on can offer the most effective advice
forward. With the lack of supply for market news and trends through the and services.
both occupiers and investors, it is information it provides. For myself
likely to continue to drive pricing personally, the real estate data EG As a company, we are expanding
higher and will see rents and yields provides has helped in drawing up our presence throughout England
sharpen. reports and keeping up to date with on our already established Hotel
the most recent transactions. EG and Leisure, Building Surveying and
The Manchester office market was data has helped provide information Petroleum and Roadside teams.
resilient in 2021 and it should remain to our clients, allowing us to use the We have recently expanded our
resilient over the next six months. data to put together requirement foothold in the North West with
The expectation in the market is lists, client reports and provide more the expansion of the Manchester
that activity levels will increase in insight into potential deals/tenants office adding Agency and Valuation,
the latter part of the year given using EG searches. EG has helped and recently opening offices in
the pent-up demand. Manchester me become more efficient when Birmingham, where we have Steven
city centre prime rents increased reporting to clients. Halfpenny (Building Surveying), and
in 2020 from £36.50 per sq ft to London with Kit Abram (Hotel and
£38.50 per sq ft and the expectation Thank you so much for your time, Leisure). The company continues
is that rents will continue to grow is there anything else that Graham to grow and invest in its people,
throughout 2021 and I think over the & Sibbald would like to highlight? which allows us to provide the best
next six months we will see good As this is a customer spotlight, we advice to our clients throughout
levels of activity in the office sector are keen to share your successes, Scotland and England as we
in Manchester. so anything as a company you are continue to grow nRegional Focus: Scotland With On-Demand Rankings, you can now access an up-to-date view of how agencies are performing across the UK by sector, geography, and deal type, updated on a weekly basis. Snapshot of contributed data from 01/01/21 to 25/06/2021 Scotland: Top Contributors – Office Contributor Space transacted (sq ft) CBRE 126,914 Knight Frank 97,958 Avison Young 57,034 Scotland: Top Contributors - Industrial Contributor Space transacted (sq ft) CBRE 584,185 Colliers International 569,556 Savills 246,719 JLL 172,856 Gerald Eve 55,608 Avison Young 46,652 Graham & Sibbald 22,556 Knight Frank 7,309 CBRE 584,185 Scotland: Top Contributors – Retail Contributor Space transacted (sq ft) Savills 259,957 CBRE 129,140 Gerald Eve 15,565 Edinburgh Top Contributors Contributor Space transacted (sq ft) CBRE 26,752 JLL 11,813 Cushman & Wakefield 10,431 EYCO 9,565 Lambert Smith Hampton 5,539 Avison Young 1,487 Scotland: Top 10 individual dealmakers by region Agent Company Total space no of deals transacted (sq ft) Gregor Brown Gerald Eve 96,014 42 Jonathon Webster Savills 191,325 23 Colin Mcmanus Colliers International 119,918 21 Stuart Moncur Savills 216,309 20 Iain Davidson Colliers International 404,266 17 Sarah Hagen Knight Frank 50,602 15 Andy Cunningham CBRE 116,991 10 Hannah Lowe CBRE 69,112 10 Andrew Peel Graham & Sibbald 25,681 9 Josh Menzies Savills 16, 765 9 For more information and to find out how to contribute your data, get in touch at deals@egi.co.uk
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