23 Jun 2015
Policy area: Town centre & Retail
Scotland’s commercial property industry created 60,872 jobs and contributed just under £6bn to Scotland’s economy in 2013, 5.3% of its total gross value added economic output and greater than Scotland’s tourism and food and drink sectors, according to a new report commissioned by the Scottish Property Federation.
The report, which will be launched this evening at a Parliamentary reception at Holyrood hosted by Ken Macintosh MSP, is the first to take an in-depth look at Scotland’s commercial property industry in eight years, highlighting how the sector is central to the competitiveness of the Scottish economy.
It shows that in line with Scotland’s economic recovery following the events of 2007/8, the overall capital value of commercial property stock in Scotland has been growing, rising to £46bn in 2013, although it has not yet reached the 2005 high of £51bn.
It also highlights how the commercial property industry has an important part to play in attracting inward investment. Overseas investors accounted for 70% of the top ten commercial property transactions in 2013, worth £1.77bn. Following significant deals such as the record-breaking sale of the Scottish Widows’ Edinburgh Headquarters to a Far Eastern investor last year, this total is expected to be even higher in 2014.
The report warns, however, that to continue to attract inward investment, Scotland will need to address the growing shortfall of modern office and industrial stock. Whereas the value of retail investment stock is £13bn, much higher than anywhere in the UK and reflective of Glasgow and Edinburgh’s place as important retail sectors, it identifies just £4bn investment office stock in Scotland.
It outlines how Scotland must provide modern office and industrial stock not only because existing space is important in terms of attracting inward investment, but also because businesses need up-to-date space if they are to thrive and grow. It recommends that 2.88m sq ft office space and 6.1m sq ft industrial space will need to be replaced or refurbished just to ensure no stock is older than 30 years.
It calculates that developing new space over and above the replacement rates could lead to one job being created per 130 sq ft office development or 505 sq ft industrial space, and that the current shortfall equates to around 6,500 jobs in the office sector and 11,500 in the industrial sector.
David Melhuish, director of the Scottish Property Federation, commented: “Scotland’s commercial property industry is not only a major asset for Scotland, contributing some £6bn a year to the economy, but it also attracts inward investment. It also provides the spaces that our businesses need, as well as contributing to Scotland’s social infrastructure in the form of shops and leisure facilities and investment assets for life and pension funds.
“It is clear that attracting inward investment and funding is going to be an important part of Scotland’s economic landscape over the coming years, and although the commercial property market has already attracted significant overseas interest, we need to ensure that we have a competitive business environment to retain and build this investment. Keeping up with the new demands of modern business premises will also be vital to ensuring we continue to provide the accommodation business needs to grow and thrive.”