Industrial Space Shortage a Constraint on Scottish Economy

The shortage of new modern industrial units below 10,000 sq ft could act as a constraint on the Scottish economy, according to Ryden’s Charlie Lawrence.

Rising land prices and construction costs, along with the loss of former industrial sites for conversion to office and residential use, are all placing significant pressure on the supply of small good quality industrial units.  This trend is affecting the majority of Scottish towns and cities and is one that the public sector and government should be taking action to address.

Start-up companies and SMEs have traditionally required small industrial units of 500 -10,000 sq ft.  Rising costs and the loss of traditional industrial sites to higher value uses has meant there is almost a complete lack of speculative development of modern units below 10,000 sq ft. The significant reduction in supply of such units as they disappear for conversion to flats or offices is compounding the problem.

Ryden has been aware of the issue for a number of years and has been advising clients to build speculative industrial space to take advantage of the reducing supply.

Despite the constraints, four of Ryden’s clients have been responsible for the speculative construction of almost 750,000 sq ft of new industrial space throughout Scotland in the last 12 months. More is needed to protect this vital sector of our economy.

Charlie suggests that small industrial units could be treated in a similar way to social housing.  When planning consent is granted developers should be obliged to construct a certain percentage of small industrial units.  Alternatively, the public sector could offer grants to developers to construct such units.  More radically, industrial or business sites could be specifically zoned for units below 10,000 sq ft.

Given current market conditions and without public sector assistance, there is a real danger of industrial and in particular, small industrial properties being squeezed out of good quality accessible locations within our towns and cities. Indeed this trend may already be too advanced to make any difference. Longer term, this will have a knock-on effect on our public transport system, as people have to travel further to get to places of work. Arguably we already face a situation where small companies or start up businesses cannot find suitable premises.

Charlie says that while industrial is perhaps not the most glamorous land use, it is a vital one. He warns that the public sector would be wise to keep a watchful eye on this trend before it becomes a significant constraint on our economy.

For more information contact Charlie on 0141 204 3838 or charlie.lawrence@ryden.co.uk