Scottish surveyors, on balance, expect commercial rents and capital values to rise overall in the 12-months ahead, however, there is a big divergence between the office and industrial sectors on the one hand and retail on the other.

With regard to rents, a net balance of +38% of Scottish respondents expects office rents to increase in the next 12 months, and a net balance of +49% expects industrial rents to rise in the same timeframe. In contrast, the net balance for retail rent expectations is -49%.

It is a similar story with regard to capital values. A net balance of +38% of Scottish respondents says that capital values in the office sector will rise in the year ahead and a net balance of +43% says that industrial capital values will rise in the same timeframe. Again, in contrast, the net balance for 12-month retail capital value expectations is -53%.

Indeed, the demand picture for retail remained extremely challenging in Q4 2019, with the balances for retail occupier demand and investor enquiries remaining firmly in negative territory.

Looking at occupier demand, a net balance of -47% of Scottish respondents saw a fall rather than a rise in demand for retail space. Conversely, in the industrial and office sectors in Scotland, demand grew at a relatively firm rate (net balances of +47% and +23% respectively).

Sandy Falconer of Falconer Property Consultants in Stirling, said: “The retail market remains the most challenging as consumer trends change and many high street pitches struggle, particularly in smaller towns and cities. Convenience remains crucial and retail areas with nearby free parking remain more attractive than more traditional pedestrianised high street locations. High rateable values remain an issue for high street type locations.”

Tarrant Parsons, RICS economist, added: “Expectations appear to have strengthened in the office and industrial sectors following the decisive outcome of the general election, with markets in prime locations, in particular, seeing projections for capital value and rental growth revised higher.

“That said, this improved sentiment has not found its way into the retail sector, where the outlook remains just as downbeat as before. Given the continued rise in retail vacancies and sharply falling demand, any change in fortunes across the sector still seems to be some way off. In the meantime, further downward adjustments in rents and capital values expected both in the year to come and further ahead.”