Why industrial units are the star commercial property performers

The industrial and logistics market has continued to be one of the best performers in the sector, as investors seek not just favourable returns but predictable revenue streams and the opportunity to meet other goals such as ESG priorities or diversification.

Central Scotland – Glasgow, Edinburgh and the M8 corridor – is the standout area for industrial investment, with strong fundamentals attracting a range of investor interest. Already this year our team has advised on more than 600,000sq ft of industrial transactions in central Scotland.

Significant increases in build costs over recent years has made the construction of new developments challenging and has led to a shortage of new high-quality industrial stock to cater for demand. Any new developments which are coming forward are necessarily being marketed at “cost rents” that is rental levels which must be achieved to allow the developers to make a reasonable profit relative their investments and risk. These rents are generally above those being achieved by good quality “up and built” stock.

The result is a supply/demand imbalance with supply levels in Edinburgh and Glasgow particularly amongst the lowest of any UK regional markets. This inevitably leads to a level of competition from occupiers who need good quality, well located space to operate their businesses and the result is upward pressure on rents.

In 2025 Glasgow’s average industrial rents grew by around 7.5 per cent with a vacancy rate of under 5 per cent, including older and obsolete stock. In Edinburgh average rents grew by around 6.5 per cent and the vacancy rate is even lower at below 4 per cent. Interestingly the lower growth in Edinburgh is probably linked to the lack of availability, creating lower transaction volumes and therefore less activity from which to generate that growth.

Demand has remained steady across the market in central Scotland. Generally, the industrial market has benefitted from the rise in online retailing and the supply chain that supports it. This is true from large-scale regional distribution centres to last-mile delivery facilities and trade counters, which often cluster within prominent multi-let estates.

These are not the only occupiers looking for space though. Industrial buildings by their very nature are large open spaces which can accommodate a variety of uses, both low- and high-tech. Production facilities, factories, storage and business support facilities are also competing for the same spaces with good proximity to the motorway network and the labour pool that Scotland’s two largest cities provide.

All of these factors combine to create a compelling case for investment in Scotland’s industrial markets. The wide variety of space creates opportunities for all investor classes from large institutional investors and REITs seeking investment at scale and trading in the biggest lot sizes, often regional distribution facilities or large wholly owned estates, to property companies or private investors seeking smaller individual assets or multi-let estates.

Amongst the property companies there is an increasing appetite to buy vacant or ageing stock where there is an opportunity to refurbish, reposition and modernise the assets which can then be reintroduced to market at higher rents and satisfy some of the demand without having to develop new buildings from scratch. The relatively simple nature of industrial buildings makes it commercially viable in almost all cases whereas it is significantly more difficult to achieve the same result with large, complicated buildings such as offices and hotels.

The outlook for the industrial sector in Scotland remains positive, underpinned by these factors.

​Jamie Thain, partner and head of commercial property for Galbraith