High value manufacturing property needs in Scotland

Scottish Enterprise (SE), and partner agencies HIE and SOSE, appointed Ryden to undertake analysis into market failure associated with the provision of industrial land and property to support the growth of High Value Manufacturing (HVM) in Scotland. This study assesses the industrial and manufacturing land and property markets to identify gaps and market failures and suggest potential market interventions. It is a strategic, Scotland wide study, but one which recognises the range of regional and sectoral manufacturing specialisms.

The study examines the strategic context for manufacturing in Scotland and how sectors in opportunity areas could accelerate creating further demand for manufacturing space. An economic baseline of manufacturing sector in Scotland is provided with a general overview and details the contribution it makes to the Scottish economy. The study assesses stock, supply, take-up and demand for industrial and manufacturing property in Scotland and considers development land. Potential funding sources for HVM infrastructure are explored, focusing on the provision of land and property.

HVM has been identified by the Scottish Government as a key thread which runs through many of Scotland’s areas of economic opportunity. The provision of suitable property and sites will be a key enabler of Scotland’s ability to respond to these opportunities. HVM typically requires flexible, digitally connected, environmentally efficient properties. Analysis of all industrial buildings in scope shows that they are ageing and of very basic quality and many have poorer EPC ratings. The development market had been active but rising costs and interest rates have curtailed the market and HVM will need to compete with other users such as logistics to secure these units. The report projects annual manufacturing property demand in low, medium and high growth scenarios and proposes options available for market interventions. This report demonstrates that property development and support will be required to meet the needs of Scotland’s HVM sector.

A number of options are available for market interventions to ensure that the land and property needs of manufacturers can be met. These options are scored and the report recommends a calls-based competitive property fund.