By Graeme Pollock, Director and Head of West Lothian Agency at the Livingston commercial department of DM Hall Chartered Surveyors
While commercial property investment volumes across Scotland certainly slowed in 2023, there is nevertheless a sense that optimism might not be misplaced in some of the busier patches, such as West Lothian, as we progress into 2024.
Active players in this market who have been waiting for the other Brexit shoe to drop appear to be accepting that the anticipated cold snap has never really materialised and that it is not imprudent to resume some sort of normal service.
The local economy has benefited hugely from the region’s strategic location which make it ideal for logistics operations. This geographically-driven emphasis on specialist warehouse and freight has maintained and enhanced the industrial unit base to a heartening degree.
In an investment-averse climate, it is notable that rents for industrial premises in West Lothian have climbed steadily in the past two years and the sector is as strong as ever, with the added attraction that voids remain pleasingly low.
Because of the Brexit hesitancy mentioned above, recent years saw little in the way of speculative build of industrial units and most of the acceptable older stock has been snapped up and repurposed, with little new stock coming through.
Initiatives in this area are now being hampered by the discouraging effect of construction costs, which mean that prospective developers would need eventual rents well ahead of market value, otherwise projects simply would not be viable.
However, distribution is now undisputed as the main game in town, employing some 4,000 people. Key hubs for major retail chains include Amazon, Schuh and Aldi near Bathgate and Morrisons at Pyramids Business Park. Tesco’s Scottish distribution centres are also located in Livingston.
Big manufacturing sheds have been repurposed for distribution and, if a manufacturing facility does come on the market, its use will almost certainly change as developers aggressively seek out warehouse opportunities. It’s simply the way the wind is blowing.
It is also within the bounds of reason to feel some level of optimism about the office market, which took such a Covid-driven hit and has been struggling for some four years now to recover from WFH protocols.
Rents are rising, as are capital values, and tenants are reconsidering their space and amenity requirements as the impetus to get people back behind a desk for at least part of the week gains momentum.
The small office pavilion market is particularly active as values are still at affordable levels and people are feeling the need to be more in control of their properties after being neglected by management companies in recent years.
Retail has been shaken to the core by economic hammerblows and the disappearance of keystone clients such as Debenhams from malls across the country has demanded new elements of creativity to find alternative, and often non-retail, uses for space.
This has had a marked effect on satellite towns such as Bathgate, which was always in the shadow of Livingston, just eight miles away and boasting more than 1 million sq ft of retail activity.
With that activity dimmed, a new local market is emerging in Bathgate, with businesses such as Japanese fusion cuisine and herbalists springing up – businesses which would not thrive in a mall environment because of unsustainable costs, but which can create their own demand in less exacting circumstances.
So, optimism has its place, and West Lothian can look to the future. Of course, as Mike Tyson said, everyone has a plan until they get punched in the face. But if such blows do come, this vibrant area is well-positioned to respond.