The annual RICS Commercial Property Conference, Scotland will bring leading industry speakers to Edinburgh on 01 June 2017 to discuss current market conditions, look beyond the traditional forms of investment and analyse future opportunities in emerging asset classes.
Neil Anderson MRICS, Lead Manager Planning & Performance, Location & Property Strategy at RBS will be chairing the conference and sharing his 25+ years of experience working in commercial property in the public sector, consultancy/agency and financial services.
In the lead up to the conference he talks about some of the trending topics: issues in the commercial property sector and current performance, changes in the future of workplace, difficulties in recruiting talent and Rating Revaluation.
What are the biggest issues currently impacting the commercial property sector?
These are primarily political, economic, supply and technology driven. In Scotland, we face the dual uncertainties that Brexit and a second independence referendum bring, I am sure the impact of these will be debated fully at the RICS Commercial Property Conference, Scotland on 1 June in Edinburgh.
Uncertainty we know tends to mean that investment is postponed leading to a slowdown in the economy. We have already seen some evidence of this in Scotland recently with the prospect of a recession. This is also partly the result of the continued depressed oil price affecting the Aberdeen market.
Our retail sector continues to underperform in town centres where the impact of large out of town developments and the growth of online shopping means that centres need to adapt and reinvent their offering. In the longer term a more flexible planning environment can help facilitate and unlock opportunities and I am looking forward to listening to John McNairney the Chief Planning Officer at the Scottish Government on how he thinks the Act will make a difference.
How is the sector currently performing?
The industrial sector is performing relatively well overall with some major deals coming through despite the absence of high quality modern stock, the retail and office sector performance is patchier. Edinburgh offices continue to outperform for prime grade A space, this is partly the result of continued undersupply caused in part by uncertainty on the development front while grade A stock in Glasgow also is doing well with good take up on new development.
The Aberdeen market, however, is still deflated with little appetite for any secondary space, there is no sign of an uptake soon. The run to quality is understandable given political and economic uncertainty. Grant Thornton reported recently that business confidence remains very low with only 15% of respondents confident about the trading position over the next year, this is fundamental to future economic growth and will be discussed at the conference.
There are some positives, however, with signs of recovery in the retail sector and unemployment is now back below the UK average so with more people working there should be a higher demand for property. I am looking forward to the debate on where delegates see future demand coming from, if recent deals are anything to go by then technology and finance firms will be at the forefront of office sector demand and non-traditional out of town retail offerings will continue to help offset the decline in more traditional town centre retail offerings.
How do you see the future of the workplace changing and adapting?
We have seen major changes already over the last twenty years with open plan flexible working becoming the norm with more and more staff given the option to work remotely and on flexible hours.
One of the biggest change between now and 2030 will be the variety of collaboration settings that will become available as staff choose how they want to work, when they come into in the workplace. Improvements in technology will make it possible for more workers to work anywhere using a variety of devices but there will still be a demand for face to face interaction and the challenge is both how to use space much more efficiently and how space can be used imaginatively to facilitate higher productivity.
We will also see the continued growth of serviced office space as companies look to limit spend on real estate overheads. It will be interesting to understand how delegates view this from a landlord’s perspective in an increasingly competitive investment environment where innovation will be a key driver.
Why is there a problem in recruiting talent into the commercial property profession?
Surveying in general struggles to compete with other professions such as accountancy, law and architecture. This is partly the result of perceptions of relatively low pay, negative reporting of surveying in the media with associations to “dodgy” estate agents and a general lack of education at school of what the profession entails and the diverse opportunities it provides for development.
There is also a continued lack of women, which at around 15%, means that the profession is missing out on recruiting the best young people whether they be graduates or through the vocational routes. It’s great to see some positive signs in the right direction such as the election of a female President and I am sure that our speakers will be highlighting other measures the RICS can do in this area.
Does the Rating Revaluation pose a significant impact to the sector?
There will be significant impacts areas such as Aberdeen where RVs have increased by up to 40% despite a falling market and in specialist sectors such as hotels and car showrooms.
One of the key measures in recent years has been to take some small businesses out of rating altogether but the threshold has been raised to an RV of £15,000. With no transitional relief and larger business with an RV of over £51,000 facing a much higher rate in the pound than in England there are significant losers as a result of these changes.
This has been compounded by the impact of changes to empty property relief that is affecting all sectors of the market but industrial in particular. Landlords and developers are left with much higher running costs which could have a major impact on the investment market going forward. I am pleased we are devoting so much time in the conference to discussing these changes with delegates getting the option of spending the afternoon covering this important topic.