Blog: Winners and losers in Lanarkshire’s commercial property market
By Ian Woods
The Lanarkshire commercial property sector is, in general terms, holding its own in market conditions which continue to be affected by legislative and political considerations as much as more traditional criteria.
In the industrial sector, some sites continue to do well. DM Hall recently advised on an old Scottish Water site in Blantyre for £500,000 over the asking price, illustrating that willing buyers are still out there.
Logistically, Lanarkshire benefits from its geographical location, astride the main motorway artery with the south, and with good links - currently being made even better with the M8/M73/M74 improvements - to the north and east.
Good properties remain popular with industrial occupiers, especially those with substantial open ground for goods yards where hauliers and contractors can store commercial vehicles and cars. Luckily, space is something Lanarkshire has plenty of.
But the industrial market is, as was widely predicted earlier this year, being affected by the Scottish government’s limitation of the empty property relief which attaches to vacant commercial premises.
This valuable benefit is being reduced from the current 100 per cent relief from rates to 10 per cent after three months, meaning that landlords would face a 90 per cent charge on non-earning buildings.
And, while there is plenty of space in the county, there are also a lot of traditional buildings, whose owners have been content to hold on to them because there was no imposition on them.
Under the new regime, we are likely to see more and more of this element of the built environment being demolished, because developers don’t want it, owners can’t get rid of it and it costs a fortune to hold onto it.
The office market in the Lanarkshire area, which - like the rest of Scotland – had for several years suffered from over-supply and restricted demand was further devastated three and a half years ago when Holyrood introduced additional empty property rating changes, remains poor.
There is so much stock available that no developer is bringing new properties on to the market, speculatively or to order. And some of the prices that have been achieved for the few office sites that have moved have been, frankly, derisory - less than comparable industrial sites.
The retail market is mixed, with encouraging activity and respectable valuations and prices in some of the smaller, provincial market towns, some of which - such as Uddingston and Bothwell - are relatively affluent.
Activity here, and in places such as Strathaven, could be being enhanced by the current fashion for localism, making small retail outlets and services more viable than in recent years.
In contrast, some larger Lanarkshire towns, such as Hamilton and Motherwell continue to struggle, with shopping street values in Hamilton still down by a dispiriting 60 per cent on their peaks.
Areas such as these have never really recovered from the proposal some 10 years ago - never yet realised - to build a massive, mega-shopping centre at Ravenscraig, the site of the old steelworks.
Under threat from the prospect of this kind of competition, they were too weak to withstand the body blow of the 2007/8 recession and many smaller operators have never recovered.
Airdrie and Coatbridge retail premises vary. Again, they are sustained by local economic activity, although values at one end of Coatbridge’s half-mile long main street can differ dramatically from the other end.
East Kilbride continues to outshine other Lanarkshire towns with the enormous East Kilbride Shopping Centre mall, Scotland’s largest undercover shopping centre. It has a mile of mall and there are more than 180 retail, leisure and catering outlets, including Debenhams, H&M, Zara, JD, Topshop, River Island, Next and M&S.
So there are some winners and some losers, but overall the course for Lanarkshire’s commercial property sector is steady as she goes.
- Ian Woods is a partner at the Hamilton commercial department of DM Hall Chartered Surveyors.