(Credit: George Iordanov-Nalbantov)
Demand for commercial property in Scotland edged up in the last quarter of 2025 according to the latest Royal Institution of Chartered Surveyors (RICS) commercial property monitor, and, despite clear challenges remaining, surveyors appear cautiously optimistic for both rents and capital values this year.
A net balance of 12% of Scottish respondents reported a rise in occupier demand for commercial property in Q4. Looking at the subsectors, a net balance of 9% of respondents reported a rise in demand for office space, whilst a net balance of 39% of Scottish respondents reported an uptick in demand for industrial space. However a net balance of -12% of surveyors reported a fall in demand for retail space (though this is considerably better than the long-term average over the past 10 years).
In terms of capital values, these are expected to rise overall during the next three months. A net balance of 9% of respondents anticipate an increase at an all sector level. Capital values for both office and industrial space are expected to rise through the first quarter of the year (net balance of 9% and 30% respectively), whereas capital values for retail space are expected to continue lower (a net balance of -12%). Surveyors remain optimistic on the 12-month outlook for capital values, with a net balance of 21% anticipating capital values to rise at all-sector level.
Looking at rental expectations, a net balance of 18% of respondents in Scotland expect rents to rise at all-sector level through the first quarter of 2026. Looking at the subsectors, a net balance of 39% expects rents to rise for industrial space and a net balance of 28% expects rents for office space to increase whilst a net balance of -12% of Scottish respondents anticipate rents for retail space will decline. On the 12-month horizon, Scottish surveyors remain optimistic on the outlook for rents too, with a net balance of 14% anticipating capital values to rise at all-sector level.
Survey contributor Leonard Kidd said: “I have noticed an increase in demand for smaller, secondary industrial units, both to purchase and to rent/let. Lots of small storage unit developments are appearing.
“Some new unit development is being undertaken mainly by Local Authority and small developers. I’m not seeing the same demand for retail shops and offices, other than for demolition/redevelopment of site, usually for residential development or smaller managed units.”
Stuart Hall, of Kingsmead Developments in Glasgow, said: “There are so many factors contributing towards a fragile market at present, both in UK and worldwide. Whilst anticipated interest rate reductions will help, the lack of confidence felt by investors, occupiers, manufacturers and the public in general will continue to suppress property markets.”
RICS head of market research & analysis, Tarrant Parsons, said: “The Q4 results suggest the UK commercial property market is beginning to find its footing after a prolonged period of adjustment.
“While near-term conditions remain relatively soft, there are tentative signs that sentiment may be stabilising, with a modest uptick in the proportion of respondents detecting early recovery signals.
“Most notably, expectations for rental and capital value growth have been upgraded across prime markets, suggesting respondents are becoming more confident in the medium-term outlook. Overall, the market seems to be shifting towards more cautious optimism, though elevated financing costs continue to temper the pace of any potential recovery.”
