Scale of renovation work needed on Scotland’s commercial property base laid bare

Majority of Scotland’s commercial buildings are not up to standard

Sixty-nine per cent of Scotland's non-domestic buildings with a live EPC are rated E or worse, according to data from finance provider Together.

More than a third sit at G, the bottom of the scale with hospitality being the worst hit with 82.3 per cent of restaurants, cafés and takeaways in the banding alongside 78.9 per cent of hotels.

Retail, however, carries the biggest absolute exposure, accounting for 45 per cent of all G-rated commercial space in the country.

An Energy Performance Certificate (EPC) rates a building's energy efficiency on a scale from A (most efficient) to G (least efficient), based on factors like insulation, heating systems and how the building uses energy.

Scotland has no minimum EPC standard yet, but change is coming and with 69 per cent of commercial stock rated E or worse, that future rule could hit landlords, rents and high streets hard.

The country’s EPC system is being overhauled, but the changes, delayed twice, won't take effect until 30 April 2028, and any commercial minimum efficiency standard depends on that reform happening first.

CoStar data shows Scottish commercial property investment fell 29 per cent year-on-year in the second quarter to £467.7 million, with retail collapsing from £123.3 million to £51.7 million as larger deals dry up.

Together figures show genuine development applications have fallen for four consecutive years, down 19.7 per cent since 2021, even as approval rates hold steady near 78 per cent.

Steven Clark, corporate sales director for Scotland at Together, said: “Scotland faces a twin challenge: delivering new development where it’s needed while bringing existing buildings up to modern standards.”