What's really driving Scotland's industrial property market?

Take-up has cooled from recent records, yet rents keep climbing and vacancy remains tight across the Central Belt, with average Scottish industrial rents rising faster than the UK average over the past year. Investors have taken note, with French funds, American private equity and specialist industrial buyers competing for a shrinking pool of quality stock, even as many landlords choose to hold rather than sell.

Planning approval for two new units at Eurocentral Gateway in the M8 corridor offers a rare glimmer of speculative development at scale.

Three senior figures – from occupier advisory, investment and capital markets – give us their verdicts on what’s really driving Scotland’s industrial property market this quarter, and what needs to change before volumes can meaningfully recover.

IAIN DAVIDSON, COLLIERS

The Scottish industrial occupier market remains fundamentally resilient, albeit in a more measured phase following several years of exceptionally strong demand and rental growth.

Current activity is perhaps best viewed as part of a wider market normalisation, following a sustained period of above-trend activity.

Take-up across all size bands in Scotland totalled 1.5 million square feet during the first half of 2026, with West Scotland narrowly leading the way, accounting for 59 per cent of occupational activity.

While take-up so far this year is running below last year’s volumes, we remain optimistic about the outlook for occupier demand. Enquiry levels are healthy across most sectors, including engineering, manufacturing, food and drink, logistics, parcel delivery and e-commerce, plus defence. And, while occupiers are taking a little longer to decide, this reflects a more considered approach to a higher-cost environment, rather than weaker demand.

One reason activity isn’t higher is there isn’t enough quality space in the right locations.

There is some cause for optimism on the supply front, however. Planning approval at Eurocentral Gateway signals a welcome return of speculative development at scale, with two new industrial and logistics units of approximately 80,000sq ft and 120,000sq ft set to start on site this autumn.

As joint leasing agents, Colliers anticipate strong interest given the success of recent speculative schemes of a comparable scale, with both Westway 200 (203,000sq ft) and Westway 90 (88,000sq ft) securing occupiers on or before practical completion in 2025.

Against this backdrop, rental growth has remained robust. Prime rents for mid-box units in Scotland increased by 8.7 per cent in the year to July, while average Scottish industrial rents rose by 6.1 per cent over the last 12 months, outperforming the UK average of 4 per cent.

Limited new development, low vacancy across core locations, and sustained demand from a diverse occupier base continue to underpin the market, supporting a positive outlook for rents and activity.

EUAN KELLY, KNIGHT FRANK

The yield gap between Scotland’s Central Belt and the rest of the UK has been fairly consistent over the last year or so. On the assumption that prime logistics assets in Scotland sit at around 5.75 per cent and in England fall to about 5 per cent, you are looking at a gap of between 50 and 75 basis points, depending on a range of factors such as asset quality or location.

There are three factors keeping investors interested – undersupply of quality space, the rental growth potential that comes from that, and the discount relative to what you’d pay in England for equivalent assets. While undersupply is a factor, there is a need to improve the quality and energy efficiency of logistics property in Scotland to meet the requirements of modern occupiers.

This can come from building new speculative developments, or utilising the bones of existing buildings through significant refurbishment programmes on options that are no longer fit for purpose. The latter can be done at much lower capital values than starting from scratch.

For volumes to meaningfully increase in the second half of 2026 we need more stock being built and traded, and more owners deciding to sell. As things stand, both look unlikely. Many owners are happy to hold their assets given the potential for strong returns and rental growth, with little in the way of additional space being built soon.

Traditional fund buyers are still active, and there have been some new entrants widening the buying pool. That isn’t much different from two years ago, but it is probably quite different to five years ago. We are seeing an increased amount of interest from industrial specialist buyers keen to get their hands dirty on under-utilised industrial stock, with a view to carrying out required works, moving on rents, and eventually exiting.

MARTYN BROWN, CBRE SCOTLAND

There’s a reasonably deep pool of buyers looking at Scottish industrial investments, and the appeal is easy to understand. Occupier demand across the Central Belt has held up well, available space is low, and rents have kept climbing. For investors, that combination is difficult to ignore.

Against the rest of the UK, the Scottish Central Belt offers one of the tightest supplies of any region, high rental growth and softer entry yields, so the underlying fundamentals on offer are highly appealing.

Two of the quarter’s five top disclosed investment transactions were industrial – Clydesmill Place and Fullarton Drive – both under £15m and both to private buyers. But those deals only tell part of the story. The buyer profile really splits by deal size. Private buyers are busiest at the lower end, generally below £3m, while above that, French investment funds are showing real appetite for good quality, single-tenant warehouses up to around £10m, and they’re selective, wanting financially strong tenants, long leases, and modern, energy-efficient buildings. For deals above £10m, American private equity is in the mix too.

The main constraint on volumes growing from here is stock rather than any shortage of buyers. Rents have been rising well, and that has shifted the thinking for many landlords, who would rather hold on than sell, waiting for rents to move up at the next review and the stronger income that tends to follow.

Traditional institutional investors have largely pulled back, and we’re not seeing much direct bidding from them at the moment, although property companies backed indirectly by institutional money are still active. The groups leading the way right now are private equity and the French funds.

Deals are taking longer to progress mainly due to more forensic due diligence being undertaken, not sector caution.

Good assets are still in demand – the ScottishPower unit at Fullarton Drive is one example, as is Frasers Property’s Hillington Park, quoted at £145m and now under offer after attracting a strong field of bidders.