At UKREiiF: Occupiers and Investors Fuel a Quality-First Approach in Industrial Property Image

At UKREiiF: Occupiers and Investors Fuel a Quality-First Approach in Industrial Property

08 May 2025

At UKREiiF: Occupiers and Investors Fuel a Quality-First Approach in Industrial Property

08 May 2025

Article by Daniel Stalker, Associate at Ryden.

Scotland’s industrial property market is entering a defining period, marked by a clear and accelerating “flight to quality.” While robust occupier demand and constrained supply have shaped the sector in recent years, the current economic landscape reveals a more nuanced shift, driven in equal measure by occupiers, developers and investors.

Ryden’s Scottish Property Review 2025 highlights that vacancy rates are hitting historic lows, underlining an active market where occupiers are increasingly challenged by the limited availability of suitable space. This demand is not simply about availability; it’s also about quality. The market is now facing a dual challenge: a diminishing stock of high quality properties and the obsolescence of inefficient buildings.

Today’s occupiers are no longer seeking to simply secure any space; they are looking for the right space. They are prioritising modern facilities that offer operational efficiency, sustainability features and supply chain flexibility. Mirroring broader UK wide trends, Scottish occupiers are turning away from legacy stock that no longer meets current expectations, be it in terms of staff welfare, energy efficiency, layout or ESG features.

In response, the development pipeline remains cautious, with speculative new builds tempered by higher construction costs, interest rates and yields shifting outwards. As a result, both occupiers and investors are increasingly turning toward refurbishment and retrofit opportunities. Upgrades, particularly those enhancing energy performance and spatial flexibility, are not only reducing operational costs but are also future-proofing assets. In this context, proactive pre-letting strategies are outperforming more conventional leasing approaches.

On the investment front, the industrial sector continues to offer compelling fundamentals. According to the Scottish Property Review 2025, investor appetite remains resilient, buoyed by long term confidence in well located, high quality industrial assets. Looking ahead, an improving sentiment supported by anticipated interest rate cuts and continued demand, suggests a favourable outlook for capital markets within the sector.

As Scotland’s industrial market shifts towards quality, success will belong to those who act in the right manner. Investors and occupiers who prioritise modern, adaptable and sustainable space, whether through targeted development or strategic refurbishment, will be best placed to capitalise on current market dynamics. In an environment where performance is paramount, a quality first strategy is no longer optional; it’s essential.