Commercial property is the throbbing artery which supplies vitality to the heart of any city and it is pulsing vigorously in Dundee and its hinterlands at the moment with the outlook for 2024 healthier than it has been for some time.

A slew of announcements about major new-build industrial developments, as well as sales which have achieved confidence-boosting prices, have added spice to an already bubbling mix of heady take-up and occupancy rates.

This surge in new development is in marked contrast to recent fallow years which had led to a dearth of quality space, with Grade A stock in such short supply that rental rates for prime properties are making the sector increasingly attractive to serious investors, both locally and internationally-based.

A conspicuous consequence of the shortage of decent space – and the fact that construction costs have become eye-poppingly expensive – is that a lot of attention has turned to refurbishing secondary and tertiary buildings which, although needing attention, are ideally situated for commercial purposes.

A number of big manufacturing sheds have been repurposed for distribution as retail activity patterns change out of all recognition and, if a manufacturing facility does come on the market, its use will almost certainly change as developers aggressively seek out warehouse opportunities.

What is particularly heartening is that some of the new developments recently unveiled in the city are of a scale which suggests a burgeoning confidence in the east coast’s wider economic outlook.

As a for instance, a new £17 million, 80,000 sq ft warehouse being built by Highlands-based Global Infrastructure for SSEN Transmission at Claverhouse East Industrial Park is the same size as the V&A which has attracted such international attention at the waterfront.

The massive storage facility is designed to play a critical role in the continued expansion and maintenance of Scotland’s electricity network.

And, as an example of the prices achievable in the current market, a 24,252 sq ft distribution facility at Nobel Road, Wester Gourdie Industrial Estate, close to the Kingsway, which is let to UPS Limited sold in February reflecting a net initial yield of 7%.

The Kingsway, Dundee’s indispensable outer ring road – originally conceived by City Engineer James Thomson as a wide, tree-lined avenue – remains an important focus of commercial activity.

Also in Wester Gourdie, a substantial industrial unit of 23,369 sq ft in Brunel Road with an office, a dedicated yard and parking areas is on the market at offers in excess of £650,000. Further afield, several buildings and associated yards are available just south of Forfar at price to be disclosed on application. 

DM Hall is also marketing units for lease within a multi-let estate at 11-12 Nobel Road, with availability from just over 2,000 sq ft and upwards and there have been recent deals completed at encouraging rental levels.

As interest rates continue to recede, and the debt burdens for businesses and investors are alleviated, it is reasonable to be cautiously optimistic that the recovery in the market will continue in the latter half of this year and, ideally, strengthen in 2025.

Adaptive re-use of buildings is likely to continue where values support the effort, and where the hurdles of construction and financing costs can be overcome sufficiently to produce a profit.

Sustainability will remain a primary focus, not only in new developments but in refurbs, where ESG credentials will be key to attracting quality occupants for whom ignoring stakeholder concerns on these issues is no longer an option.

Last year will not be remembered fondly by many investors but, with activity continuing in the secondary industrial market and investors ready to pounce on any unwanted assets being offloaded by funds, this year and next should be more rewarding. The fundamentals remain good, and the money to sustain growth is out there.

Paul Carr is a Director of DM Hall Chartered Surveyors covering Tayside and Fife.

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