A leading independent property consultancy with expertise covering a broad spectrum of property related services

Flying under the radar

Jamie Thain provides an update on the Scottish multi-let industrial market.

The headline deal volume figures across the Scottish commercial property investment market so far this year have been above the long-term average at around £1.4 billion by the half year.  

A number of large office, retail and hotel deals stole the headlines and rightfully so, however, we have also had a very active time in the multi-let industrial market. 

By October this year there had been 17 multi-let industrial transactions in Scotland, totalling around £124 million in value. A few large deals made up some of these numbers including: Canmoor/JCAM’s completion of the Westway Park, Glasgow deal in March for £37m, reflecting 8.90%; regional rEIT’s sales of Wardpark Industrial Estate Cumbernauld for £26.40m and The Point, Glasgow for £14.10m; and Aberdeen Standard Investments’ purchase of Clyde Gateway East for £10.65m, reflecting 6.10%.

Of the remainder, 12 deals done this year have been below £5m in lot size and where these deals have hit the market they have quickly become a hot commodity and generally achieved well in excess of asking prices. For the best multi-let stock (solid locations, modern units) we have seen as many as 14 investors bidding at individual closing dates. 

2018 has seen as many purchases by private investors and small property companies as by larger property companies, REITs and institutional investors. This tells us that private investors are attracted to the yield profiles (which at between 6.00% and 9.00% reflect a fair property risk premium over bonds) and that they are increasingly willing to take on active management opportunities. 

Good multi-let stock remains in demand from across the investor spectrum. However, the lack of available opportunities is likely to dictate the volume of transactions over the rest of the year rather than lack of market appetite. 

Now more than ever it is important to take considered professional advice when buying or selling.