Galbraith Commercial Matters Summer 2021

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n ESG and achieving Net Zero

in Commercial Property n Unique conversion:

from historic building to events venue n Light at the end of the

tunnel for Scottish Investment Market n Changes to PAC

requirements in Scotland

Summer 2021

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Contents

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Q&A: ESG and Net Zero Carbon Strategies

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People: Planning team welcomes new graduate

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Deal Round-up

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Scottish Investment Market Overview

Opportunity, Energy and Adaption As we enter the second half of 2021 we do so with more flexibility and agility in our thinking and how we live and work.

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he commercial property sector has responded with remarkable resilience and determination to the accelerated changes with owners and occupiers responding quickly to new opportunity and the necessity to work collaboratively.

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Market focus: Office & Industrial

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Converting Rosebery Farm Steading

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Textbook: Principles of Commercial Management

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Case Study: Duckburn Industrial Estate, Dunblane

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Case study: Ardmore House, Edinburgh

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Planning: Changes to PAC requirements in Scotland

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The resilience of convenience retail

Our core property asset management and agency services have been busier than ever serving our clients, tenants, and occupiers in complex times – the need for clear, concise advice and knowledge has never been more critical.

The article on Environmental Social Governance highlights that we must embrace our collective responsibility whilst recognising that embedded carbon in existing buildings should not be discounted too heavily. The repurposing of buildings is an illustration of using our built heritage to create refreshed dynamic spaces, new economic activity, and employment opportunities. n

Richard Higgins 07717 581 741 richard.higgins@galbraithgroup.com

Galbraith is a leading independent property consultancy. Drawing on a century of experience in land and property management the firm is progressive and dynamic employing over 200 people in offices throughout Scotland and the North of England. We provide a full range of property consulting services across the commercial, residential, rural and energy sectors. Galbraith provides a personal service, listening to clients and delivering advice to suit their particular opportunities and circumstances.

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With sale and leaseback activity on the increase, Will Sandwell explores some of the fundamentals and characteristics of sale and leasebacks.

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he sale and leaseback (S & LB) process is nothing new, an owner occupier (freeholder) of commercial real estate sells their property and simultaneously converts their tenure into a leasehold interest. In return for a capital receipt, a lease is created which produces an often predetermined cash flow for an investor.

The concept is sound, a S & LB artificially moves the property assets into the traditional landlord/tenant market. In practice, however, there are many considerations and points of debate. We use the term artificial because the vendor (soon to be tenant) has total control at the outset, normal market influences aren’t present.

The main question for a vendor/tenant is, do we want to own or lease our property?

A management decision has to be made and this is likely to require input from the financial and accounting functions of the business. There is no rule dictating which tenure is better for any particular company.

Some argue it is important to hold property assets on a balance sheet. Conversely, many business owners and financial directors suggest it unnecessarily ties up capital.

This is only a summary and the argument can vary depending on scale and operational needs.

We have explored some S & LB considerations below: ● Operational requirements – is the building fit for purpose and how long for? ● If leased rather than owned, modern full repairing and insuring (FRI) leases require tenants to be fully responsible for their buildings. Vendors must anticipate their long-term lease obligations over and above rent.

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“It’s Back”...

The Sale and Leaseback The growing demand for long indexed linked investments from across the whole investor spectrum means properly structured S & LB opportunities are well received. This current landscape favours the position for a vendor/tenant.

● How long should the leaseback term be? Longer leases generally increase value. 15 to 20 years is not uncommon. Short-term structuring shouldn’t be dismissed. ● How should we set the initial rent?

A lower rent results in a lower price. High rents can become unsustainable. Inflation-linked rent reviews are common place in order to help compress yields (increase price) but rents can then sometimes overtake the market which doesn’t support good property fundamentals, for tenants or landlords. ● Sale and leasebacks are common place in specialist sectors, for example, healthcare / leisure.

Investors should be mindful of long-term underlying value and property fundamentals.

Tenant companies are now obliged to record longer-term lease obligations in their accounts.

● Investors must also be mindful of vendor/tenant covenant, and value the cash flow appropriately. What is the rationale behind the sale and leaseback? Can the tenant afford the rent, what is happening with the capital receipt? ● Should a tenant extension clause be included along with a rent rebasing mechanism in the longterm? Should a buy-back clause (even a lease and leaseback structure) be included?

One of the main changes recently has been accounting practice. The traditional argument for S & LB was to move an ‘asset’ from the balance sheet, creating a capital receipt from the sales process and, in return, reflecting a smaller annual rent liability in the profit and loss statement. Modernisation of accounting practices have made this more transparent. Tenant companies are now obliged to record longerterm lease obligations in their accounts. In addition, IFRS 16 can determine the treatment of a transaction and, indeed, long leases can be considered finance leases thus remaining on the balance sheet as a liability. Professional accounting advice must be taken at the outset in this regard.

As a multi-disciplinary property consultant, we advise our clients on both heritable (freehold) and leasehold interests along with the transition in the case of sale and leaseback transactions. The most important message when targeting a successful sale and leaseback is to take objective, rounded advice from an early stage as well as seeking market specific and technical input to inform the decision making process. n

Will Sandwell 07801 266 373 will.sandwell@galbraithgroup.com 3

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An Introduction to Carbon Reduction & Achieving Net Zero within Commercial Property

n 177 Bothwell Street roof terrace and track

In this Q&A, Jamie Thain, investment Partner at Galbraith, talks with Anne Johnstone, founder of Fair Futures Partnership, about ESG and Net Zero Carbon Strategies.

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nvironmental Social and Governance (ESG) and a commitment to decarbonise across the whole of society has gained significant momentum over the last year.

On 27 June 2019 the UK Government took the historic step of making a legal commitment to deliver 100% greenhouse gas emissions reduction by 2050 – Net Zero.

This was the fastest implementation of a recommendation by the Climate Change Committee since it was created under the Climate Change Act in 2008. But changing the legislation is the easy part.

Introducing the policies, regulations, support mechanisms and changes in behaviour that will be needed to deliver the Net Zero target will be much harder.

In December 2020 the Climate Change Committee published its advice to Government on the 6th Carbon Budget and a path to Net Zero in 2050 compatible with the UK’s commitments under the Paris Agreement.

The built environment has a crucial role to play in the path to Net Zero and the Galbraith Commercial Team will be covering the subject and its impact on buildings, their owners and their 4

occupiers, in this and future issues of Commercial Matters.

Jamie Thain (JT): Welcome to Commercial Matters, Anne. Thank you for taking the time to discuss this important subject with us. Simply from reading the papers or listening to the news, I’m sure our readers are aware of the subject and the commitments that both the UK and devolved governments have made to tackle the climate emergency. Recently, the UK Government announced an enhanced commitment to cut carbon emissions by 78% by 2035 as a path to Net Zero by 2050. This commitment became enshrined in law in June this year.

Can you tell us what has driven this change and what are the key pieces of legislation we need to be aware of?

Anne Johnstone (AJ): The youth climate movement has raised awareness of climate issues generally and influenced governments to be more ambitious in their climate policies. They have been very effective at turning a spotlight on businesses and calling out green washing. There have been many surveys published showing that the number of businesses actively trying to become

more environmentally responsible is increasing (e.g. huge uptick in interest in B Corp status, [businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose]) and there is growing recognition that being environmentally responsible is important to future success. Although the trend is stronger amongst younger people and start-ups, it’s happening across the board. This is partly in response to customer demand, but also in response to demands of the workforce. It is increasingly important to show that you are an environmentally and socially responsible business to attract and retain good staff. It is also, importantly, in response to the demands of investors, and there is no sign of this diminishing even with the pandemic.

In terms of legislation, the 2008 Climate Change Act and the 2009 Scottish Climate Change Bill are key as these are the instruments that enshrine Net Zero targets in law (2050 for the UK and 2045 for Scotland). Many other pieces of legislation will be forthcoming over the next few years, from banning sale of ICE (Internal Combustion Engine) vehicles in

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2030 to phasing out fossil fuel heating systems in homes (starting with a ban on gas boilers in new homes by 2025).

AJ: The basic definition of ‘Net Zero’ means taking the same amount of carbon out of the atmosphere as is put in, either by sequestering it (e.g. planting trees or restoring peatland) or via technology (carbon capture and storage). However, actually applying this definition to a particular sector and having consensus on that definition is very difficult. Recently, a number of eminent climate scientists, including the scientist who originally coined the term ‘Net Zero’, have expressed concerns that it is being used to put off decisions about what we really need to do to keep global warming below 2oC. What we really need to do is focus on absolute reductions in carbon, which means curbing our demands. We need to stop burning fossil fuels, as simple as that.

The main components of that change are we need to electrify everything and generate electricity from renewables.

This has to be driven by policy, but what we can all do is think about ‘absolute’ zero rather than Net Zero – what can you do to reduce your consumption and therefore emissions, rather than offsetting it?

What is the difference between direct and indirect emissions and what are the main areas of opportunity for emissions reductions within the built environment?

AJ: To start off, you need to know your carbon footprint. You need to identify the sources of your emissions, and then measure them. Those sources generally fall into three categories – Scope 1, 2 and 3. Scope 1 and 2 emissions are direct – that is, they are within your control. In commercial real estate this includes things like landlord-purchased gas and fuel and landlord-purchased electricity.

Scope 3 emissions are those over which you do not exert direct control but are still generated as a result of your investment or core business activity. For

example tenant purchased energy, embodied carbon or via your supply chain. It has previously been commonplace for strategies only to include Scope 1 and 2 emissions, because Scope 3 were deemed too difficult to measure. That is now becoming less acceptable, because Scope 3 emissions can account for as much as 95% of a business’ carbon footprint, particularly in commercial real estate.

The ‘easy wins’ for emissions reduction are: • Switch to 100% renewables as soon as possible • Develop an energy reduction plan • Look at business travel emissions – compare pre - and post-COVID habits, what changes can you keep?

• Buildings – retrofitting and automation, e.g. replacing light fittings with LEDs, introducing smart meters and submetering • Look at your company pension scheme – according to Make My Money Matter, making your pension sustainable can be 27x more effective at reducing your carbon footprint than giving up flying and becoming vegan, combined • Review staff incentives and compensation to encourage behaviour change – e.g. working from home, support creation of neighbourhood work hubs • Provide/promote the choice of plantbased food/drink where possible • Invest in engagement across your whole business – training, communication and empowerment.

Climate Change Committee Sixth Carbon Budget

5-year carbon budget (MtCO2e)

JT: The built environment clearly has an important role to play here. The Government has accepted the advice of the independent Climate Change Committee’s (CCC) Sixth Carbon Budget report, The UK’s Path to Net Zero. The report says that low-carbon investment must scale up to £50 billion a year in the UK to achieve these targets. According to the CCC report, buildings currently account for around 17% of the UK’s direct greenhouse gas (GHG) emissions (77% from homes, 9% from public buildings and 14% from commercial buildings). This increases to 23% when indirect emissions are taken into account.

Look at business travel emissions – compare pre and post - COVID habits, what change can you keep?

Emissions including IAS (MtCO2e/year)

JT: The transition to Net Zero emissions from where we are today seems a huge task. What does Net Zero mean and what are the main components we need to consider in order to make the necessary changes and adapt the way we live and work to achieve this?

The Sixth Carbon Budget Past Carbon Budgets Historical emissions

Headroom for IAS emissions Active legislated carbon budgets The Balanced Net Zero Pathway

Source: BEIS (2020) Provisional UK greenhouse gas emissions national statistics 2019; CCC analysis.

Notes: Emissions shown include emissions from international aviation and shipping (IAS) and on an AR5 basis, including peatlands. Adjustments for IAS emissions to carbon budgets 1-3 based on historical IAS emissions data; adjustments to carbon budgets 4-5 based on IAS emissions under the Balanced Net Zero Pathway.

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JT: Turning to commercial buildings now, many of our readers are owners or occupiers of commercial property. We are all now used to reviewing the Energy Performance Certificates (EPCs) of buildings which have been a legal requirement when selling or leasing for some time. EPCs recommend measures which can be taken to improve the energy efficiency of buildings in certain ways.

pension funds and large property companies now have a focus on ESG and are increasingly applying these factors in how they operate their businesses and invest in their properties.

Do you see this system being adapted to take account of the enhanced UK target for achieving Net Zero?

AJ: My main advice would be: it’s not just about carbon. Yes, asset owners should be trying to decarbonise their assets, but they should also consider other important environmental and social aspects such as the health and wellbeing of occupants, opportunities to enhance biodiversity and the connection between their asset and the surrounding community. A good example is indoor air quality, something that will become a material consideration to occupiers as we adapt to living with COVID-19.

AJ: EPCs are useful as benchmarking tools and are likely to continue to be used for the foreseeable future, however, what they are not good at is accurately reflecting a building’s energy performance in operation. The UK government is currently consulting on proposals to introduce new annual ratings and mandatory disclosure for large commercial and industrial buildings (> 1,000 m2) in England and Wales. This is the first step in the government’s plans to reduce the energy consumption of commercial and industrial buildings by 30% compared to 2015 levels by 2030.

The policy is based on the Australian NABERS scheme, which has recently been adapted for the UK market by the Better Buildings Partnership. This is clearly a significant change from obtaining an EPC that only has to be updated every 10 years. Further phases of the government’s proposals will extend mandatory disclosure to other types of buildings and to smaller buildings. The focus on how buildings are actually used, rather than how they are designed, is crucial in achieving Net Zero. I would anticipate new regulations to be in force in England and Wales by next year.

JT: Owners and occupiers of commercial property will be at different stages of addressing the efficiency and emissions of their buildings. We know that most large scale property owners such as

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Is there any general advice you would give to property owners and occupiers who are perhaps less well progressed in this area but who want to take steps to improve their assets from an environmental perspective?

JT: It seems to me that as society in general embraces the changes required to achieve Net Zero by 2050 and behaviour and mindsets evolve, buildings with strong environmental and sustainability credentials will become increasingly more attractive to occupiers and investors as they seek to achieve their ESG goals. There is clearly a requirement for investment, which in some cases will be significant, in order to improve or upgrade buildings, but it must surely follow that at least some of this investment will be repaid in added value and reduced running costs.

Do you agree and have you seen any examples of this already?

AJ: Yes, absolutely. For most large corporates setting Net Zero carbon targets, the two biggest areas of scrutiny are their offices and their business travel.

I’m aware of examples of companies exerting lease breaks purely because their existing building is not carbon neutral, and of a Net Zero carbon building being the number one criterion for those seeking new premises. In response to that, many recent Grade A office developments have been constructed with fully electric systems that previously would have utilised gas, for example HFD’s Bothwell Exchange in Glasgow. Other examples include Peel L&P, who had 11 office buildings in Manchester and Liverpool verified as Net Zero under the UK Green Building Council’s 2019 definition - the first to do so. Also the Better Buildings Partnership Climate Commitment currently has 24 signatories, representing more than £300 billion AUM and 11,000+ properties, which demonstrates the importance of achieving Net Zero to investors. It would be disingenuous to say that there are no costs associated with transitioning to Net Zero or improving climate resilience, but the issue for investors and occupiers alike is that asset owners who do not address these issues now represent increasingly greater risks as time goes on.

JT: The UN Climate Summit (COP26) is due to take place in Glasgow this Autumn. What is the significance of this and will you be attending?

AJ: COP26 is the most important global climate meeting since COP21 in Paris in 2015. It is a ‘global stocktake’ of how the nations of the world are doing in meeting their commitments under the Paris Agreement. Every country will find its plans and targets for achieving Net Zero emissions – its Nationally Determined Contributions – under scrutiny. The challenge in Glasgow will be threefold: significantly increasing the level of ambition that developed

Jamie Thain 07798 647 620 jamie.thain@galbraithgroup.com

Anne Johnstone anne@fairfuturespartnership.com

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People countries, in particular, have displayed thus far to reducing greenhouse gas emissions; adapting to a low carbon economy; and financing the transition.

Industrialised countries must make the largest emissions cuts and must also provide the finance needed to help developing countries. This is not all going to be solved in Glasgow during the first two weeks in November. COP26 is part of a process, not a solution in itself. The role of other parties in that process is crucial – cities, institutions, investors and society at large. I am working on an initiative called After The Pandemic, developing a cultural and creative hub for COP26 centred around an area of vacant and derelict land on the River Clyde, less than a mile from the location of COP26. After The Pandemic is an accelerator for change, incubating and enabling creative projects that impact our society, cities and the environment for the better.

The initiative develops ideas through the collaboration of local communities, creative practitioners and like-minded organisations, in order to create, fund and deliver: • Cultural & arts installations, programmes and content

• Educational toolkits, design schools and research • Events, community engagement and outreach.

Our mission is to rethink, reimagine and redesign the world around us to be greener, more resilient and more vibrant. Our aim is to provide a space for the people of Glasgow, first and foremost, to engage in COP26 in a way that is meaningful to them. Huge global questions will be discussed at COP26, but the solutions will have to start at a local level. We are activating this area of vacant land to showcase the creativity and innovation, which is happening throughout Glasgow and Scotland as a whole, while also addressing global challenges at a local level. And we are forging links around the world to highlight responses to the climate emergency, biodiversity loss and other converging challenges including the pandemic. So I will be around COP26, but not at it.

Instead dedicating myself to ensuring that it’s not something that just happens to Glasgow without a lasting legacy. If any of your readers want to know more about After The Pandemic, they can head over to our website www.afterthepandemic.scot.

JT: Clearly this is a massive subject to cover and we will continue to address it in future publications but hopefully this Q&A provides a useful overview of the subject to build upon. Anne, thank you very much indeed for your contribution to this issue.

...Asset owners who do not address these issues now represent increasingly greater risks as time goes on.

Anne Johnstone is a leading environmental and sustainability consultant specialising in the built environment. Anne founded Fair Futures Partnership in July 2020 to focus on working towards a just and fair zero carbon economy. She was formerly a Partner at Hollis, where her key achievements include establishing and growing a successful environmental team across the UK, Ireland and mainland Europe, developing an ESG due diligence product and driving the development of an innovative approach to establishing Net Zero carbon pathways for existing building stock. Anne is also a prominent figure in the wider property industry. She was Chair of the UK Environmental Law Association (UKELA) from 2017 – 2019 and is also on the board of the Investment Property Forum in Scotland, a member of the Scottish Vacant and Derelict Land Taskforce, a board member of the Construction Scotland Innovation Centre and a Fellow of the RSA. n

Galbraith Commercial team welcomes new graduate Etienne Murphy joins the Galbraith Commercial team where he will be working on projects alongside partner Calum Innes and the wider business.

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tienne has previously gained parttime work experience with Galbraith as an assistant planner during his final year studying Urban Planning & Property Development at Heriot-Watt University in Edinburgh.

Originally from France, Etienne grew up on the north coast of Scotland and moved to Edinburgh to study Physics at Heriot-Watt where he gained a Bachelor’s Degree before studying Urban Planning. During this time he also worked as a landscape gardener in and around Edinburgh and continued to work ad-hoc as a forester throughout Scotland and France.

Although Etienne has taken an usual route into property and planning, his diverse background has given him a practical perspective on property and planning issues. His time spent working outdoors and on construction sites gives him ‘on the ground’ reality of projects, while his Physics degree has developed his ability to problem solve and process complicated information. n

Etienne Murphy 07557 283 177 etienne.murphy@galbraithgroup.com

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Deal Round-up

Belleknowes Industrial Estate, Inverkeithing On behalf of Patrizia and Caisson Investment Management, Galbraith acquired Belleknowes Industrial Estate. The asset, which is located in Inverkeithing, Scotland, is a 140,000 sq ft estate. The estate comprises 22 units of varying sizes ranging from 3,400 – 17,400 sq ft and provides trade, warehousing and light industrial accommodation. The estate has a strong occupier base, including Network Rail, Bella & Duke and Speedy Hire. It benefits from low passing rents coupled with good accessibility to Edinburgh and is 15 minutes from Edinburgh airport. Being in an area of restricted supply, leasing the four vacant units should result in rental growth and full occupancy in the short-term. The investment was acquired for £10.50 million, reflecting a net initial yield of 5.95%.

Industrial Ground Lease Portfolio, Bridge of Don, Aberdeen In an off-market transaction, Galbraith identified and advised Wesleyan Assurance Society on the acquisition of a long income industrial ground lease portfolio in Aberdeen. The portfolio produces £462,000 p.a. in rent and comprises 17.65 acres of land across eight sites. The sites are let for an average of 70 years to a number of different tenants with no break options. The price was approximately £9.292m reflecting a sub 4.75% yield.

The portfolio produces £462,000 p.a. in rent and comprises 17.65 acres of land across eight sites.

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8 Bankhead Crossway North, Sighthill, Edinburgh

Clyde Gateway Trade Park, Glasgow Galbraith was instructed to sell this prime multi-let industrial estate on behalf of Cedarwood Asset Management. The estate is located in Rutherglen, approximately 2.5 south east of Glasgow City Centre. The asset comprises a terrace of four modern industrial units extending to 27,409 sq ft and is let to Evolution Fasteners and Allied Vehicles at a passing rent of £164,750 p.a.. The investment was sold for £2.45m, which reflects a net initial yield of 6.32%.

Galbraith was instructed to sell this prime multi-let industrial estate in Sighthill on behalf of a private investor. The estate extends to approximately 18,204 sq ft and comprises four units, ranging in size from 1,860 – 13,707 sq ft. The asset is well let to Thornbridge Timber, Young Malt Company & Ashley Ann at a total passing rent of £169,813 p.a. The investment was acquired by an Edinburgh-based property company at a price of £3.00m, reflecting a net initial yield of 5.31%.

Craigentinny Retail Park, Edinburgh

7C North Caldeen Road, Coatbridge The Galbraith investment team was instructed to sell this single let industrial investment on behalf of DS Properties. This asset extends to approximately 13,815 sq. ft and is let to McGregor Young for a further five years at a low passing rent of £5.32 per sq ft. The investment was acquired by a private investor for a price of £975,000, reflecting a net initial yield 7.14%.

The Galbraith investment team acquired Craigentinny Retail Park on an off-market basis for Rankeilour Properties. The asset extends to approximately 25,232 sq ft and is let to Halfords, Archers, Connection Flooring and Sue Ryder at a total passing rent of £287,350 p.a.. The park is located to the north east of Edinburgh city centre on a very prominent location alongside a number of other retail warehouse occupiers including B&M and Poundworld. The investment was acquired for £3.10m, reflecting a net initial yield of 8.71%.

1179 / 1265 Gallowgate, Glasgow On behalf of Cedarwood Asset Management, Galbraith acquired a multi-let industrial investment on Gallowgate, Glasgow. The prominently located property comprises a 8,531 sq ft warehouse let to SIG plc and a former petrol filling station being let as a valeting service. The investment was acquired for a price of £380,000, reflecting a net initial yield of 12.09%.

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Overview

Light at the end of the tunnel Jamie Addison-Scott provides an overview on the Scottish Investment Market.

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he Scottish investment market has been no stranger to uncertainty in recent years.

2020 has been no different, although this time it has come in the form of a global pandemic rather than being politically or economically driven.

In the past 12 months we saw more than £950m of commercial property transacted throughout Scotland, which is a significant drop from £2.2bn in the previous 12 months.

That said, there have been a number of success stories during a tricky year, such as the industrial sector, so let’s take a look at the market sectors with examples of significant transactions.

Industrial The industrial sector continues to go from strength to strength. There has been a surge in occupational demand for last-mile delivery facilities due to the accelerated shift from the high street to online retailing. This has exerted further pressure on already constrained industrial supply, especially within the Central Belt, which has led to solid rental growth. The sector continues to look attractive with strong tenant demand and limited supply across the country. The shortage of modern industrial accommodation across Scotland should encourage further capital and rental growth in good quality stock going forward.

n Belleknowes Industrial Estate, Inverkeithing

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Belleknowes Industrial Estate, Inverkeithing • 140,000 sq ft multi-let industrial estate comprising 22 units (3,400 – 17,400 sq ft) • Vendor: Federated Hermes • Purchaser: Patrizia / Caisson Investment Management • £10.50m / 5.95% Titan, Eurocentral • 122,575 sq ft distribution centre let for 10 years (TBO at 5) to The Scottish Ministers • Vendor: Winward Titan Limited • Purchaser: Lothian Pension Fund • £14.326m / 5.01%

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Alternative

Longman Road, Inverness

The residential sector has proven to be resilient in the face of the pandemic. The Build to Rent (BTR) and Purpose Built Student Accommodation (PBSA) sectors are offering investors attractive income in a growing sector with positive demand and supply dynamics. In Scotland, there continues to be a lag in the BTR sector when compared to England, although 2020 provided the highest BTR volumes on record in Scotland and there is no sign of this slowing.

• 90,294 of retail warehousing accommodation let to B&Q (61,810 sq ft) and Wickes (24,484 sq ft) with a WAULT of 5.50 years.

Gilmore Place, Edinburgh • Forward funding of a 230 unit PBSA development • Vendor: S1 Developments • Purchaser: Aberdeen Standard Investments • £29.1m / 5.50%

• Vendor: Aberdeen Standard Investments • Purchaser: Columbia Threadneedle • £12.55m / 8.07% Renfrew Road Retail Park, Paisley • Recently developed retail warehouse and food store totalling 60,000 sq ft, let to The Range & M&S with a WAULT of 15 years.

• Vendor: London and Scottish Investments • Purchaser: Income Realty • £12.96m / 6.00%

Candleriggs Square, Glasgow • Forward funding of a 346 apartment BTR development • Vendor: Drum Property Group / Stamford Property Group • Purchaser: Legal & General • £81.5m / 4.50%

Office The return to the office is linked hand-in-hand with the successful roll out of the vaccination programme. We understand that many workers are eager to return to the workplace to find a better balance between work and home life. Pricing for good quality offices has remained stable throughout, especially for buildings which do not require significant capital expenditure.

Quartermile 3, Edinburgh • Prime Grade A office let to State Street / Cirrus Logic for 8.50 years • Vendor: M&G • Purchaser: KanAm • £45m / 4.61%

Retail The retail sector has been hard hit by the pandemic with the crisis accelerating a further shift from “bricks and mortar” to online retailing.

The shift in these relative volumes has been building for a number of years but there has been definite acceleration over the course of the last 12 months. Nevertheless, there remains a number of opportunities in the sector such as retail warehousing, with well-located parks proving to be an attractive investment, not only for more opportunistic investors but also for institutional investors.

Supermarkets and other food retail have also performed well over the course of the pandemic as almost all stores remained open providing food and essential goods.

Pricing continues to harden for supermarkets and stock is increasingly harder to come by.

Cuprum, Glasgow • Grade A office building located in the IFSD of Glasgow totalling 100,416 sq ft, let to Teleperformance, AXA Insurance & SAS Software • Vendor: Credit Suisse • Purchaser: Trinova • £28.25m / 7.10% (SPV) The Galbraith Commercial Investment Team is active across market sectors and would be delighted to assist you with your investment needs. n

Jamie Addison-Scott 07824 435 094 jamie.addison-scott@galbraithgroup.com

... there remains a number of opportunities in the sector such as retail warehousing, with well-located parks proving to be an attractive investment...

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Office: Shoots of resurgence Ben Dobson on the changing office space take-up in Glasgow and Edinburgh.

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s Scotland moves forward from lockdown we have seen continued improvement in both the Glasgow and Edinburgh office markets. Takeup in both cities is rising and active requirements are coming back to the fore.

In Edinburgh take-up figures totalled just below 90,000 sq ft for the first quarter of 2021. This is a decrease in 31% from the previous year’s position, however, with a number of larger deals (over 5,000 sq ft) having been undertaken and circa 30% of all transactions in the period for Prime Grade A space, there are definite shoots of resurgence in the statistics.

Take-up in the Glasgow market recorded a more significant drop in numbers to around 75,000 sq ft of take up recorded for the first quarter - a decrease of over 50% on the average.

Nonetheless, hope still springs eternal in the west of the country as Grade A space remains at an absolute premium. With a plethora of good quality and live requirements making their way to the market, the general expectation is that statistics will improve significantly over the course of the year.

In both cases there are certain trends that will be interesting to follow as 2021 progresses.

A lack of Grade A space is prevalent in both markets and prime rents seem set to continue to rise in both cities.

While supply has naturally increased across the board, it has not done so to a level that would offset the steady stream of active requirements currently circulating. Both markets are enjoying well in advance of 500,000 sq ft of active occupier demand.

Grey space, also known as tenant supply, will play a factor in the coming year as companies look to double down on specific occupier strategies. We expect to see an increase in this type of space as the year progresses and this may put downward pressure on rental levels, especially within periphery or nonprime sectors of the market.

Workplace trends and themes that have grown during this period will be sure to continue, such as ESG (Environmental, Social and Governance) of buildings, alongside a continued focus on green credentials. n

Ben Dobson 07584 336 085 ben.dobson@galbraithgroup.com

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| Commercial Matters | Summer 2021

Industrial: The future’s bright Ben Dobson reports on the Scottish industrial market’s upward trends.

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he industrial market in Scotland is currently experiencing a substantial purple patch and the climate of reduced good quality stock and increased occupier demand is beginning to significantly drive rents forward.

One of the major sectors that has been driving this resurgence is Logistics and Distribution, from haulage operators to 3PL (Third Party Logistics) and online retailers.

Active requirements across this sector have been rampant throughout the year and this has seen not only record levels of take-up within certain areas but significant increases in rents across the board as occupiers fight for the best possible space.

In the last year the Covid-19 pandemic has had a notable effect on the industrial market.

Edinburgh has seen a decrease in take-up of 22% from 2019, however, demand has remained steady in most sectors and increased in others.

A considerable lack of supply has driven rents up, specifically for stock above 20,000 sq ft. This in turn has made speculative development a lot

more attractive with units in the west of Edinburgh over 10,000 sq ft regularly achieving in excess of £9.00 per sq ft and units of 20,000 sq ft and above achieving over £7.00 per sq ft.

In the West of Scotland, we anticipate continued upward pressure on rents, especially with regard to bigger box developments and well refurbished distribution units. The average logistics rent across the central belt has now risen to £6.25 per sq ft - a 15% year-on-year increase.

We have also seen significant upward market pressure on rents within smaller box and trade counter sectors. Prime Rents for Edinburgh have now increased over £9.50 on average and in certain areas of the city, such as Sighthill or Loanhead, double digit rents of over £10.00 are due to become the market norm.

In Glasgow and the West we have also seen an increase in levels with prime rents rising to £8.75 per sq ft. This coupled with the record take-up achieved, of over 3.5 million sq ft in 2020, paints a remarkable picture for the continuing future of the industrial sector in Scotland.

In terms of speculative development, the pipeline across central Scotland, including Edinburgh and Glasgow, remains limited with good quality sites and land at a premium. The largest speculative development scheme in the West of the country to be finalised in the next 8-12 months is only expected to provide 50,000 sq ft of new good quality stock. Meanwhile, in Edinburgh the major outlined development projects, such as Capital Park in Sighthill, will only be able to accommodate two or three units of over 20-30,000 sq ft at a maximum.

For the coming year the signs remain positive that these upward trends are here to stay, certainly for the short- to medium-term. Occupier demand continues to remain steady and even increase in some sectors as the marketplace returns to normal following the second period of lockdown. In short, the future is currently bright for Scottish Industrial and long may it continue. n

Ben Dobson 07584 336 085 ben.dobson@galbraithgroup.com

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Commercial Diversification:

Converting Rosebery Home Farm Steading

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| Commercial Matters | Summer 2021

Martin Cassels on the transformation of a historic building into a diverse events venue.

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ollowing the successful conversion of the historic Barnbougle Castle at Dalmeny, which featured on the cover of Commercial Matters, Issue 9 Summer 2019 soon after it was completed, Robert Garrett and Martin Cassels of the Project Management and Building Surveying Team at Galbraith have just completed the project management of another unique events venue for Rosebery Estates.

Rosebery Steading is set within the heart of Rosebery Estate, originally serving Rosebery House. The project involved creating a flexible and diverse events venue by converting the 200-year-old ‘A’-listed steading buildings and is a further chapter in the commercial diversification of an historic rural estate.

Galbraith have been involved since 2014 when the steading was part of an agricultural tenancy.

Over the course of the next few years of negotiations by the Galbraith Rural team, working with a full design team, the buildings were returned to the estate and the farmland taken back in hand. An initial demolition phase to remove redundant agricultural buildings was undertaken, revealing the stunning core traditional buildings whose substantial potential could not be ignored.

The project initially started with the conversion of two areas of the building to form luxury selfcatering accommodation to add to the existing Farmhouse which also required substantial upgrading. As the market for events and demand increased rapidly over the last five years, the project was expanded further to bring in all areas of the building as a flexible venue.

Completed in late 2020, Rosebery Steading is now a versatile wedding venue, boasting two large adaptable entertainment spaces with luxury elegant accommodation, a bespoke bar and extensive private grounds with a central courtyard.

Many original features have been retained, including the striking and dominant clock tower overlooking the courtyard with the clock face restored on all sides. The unique accommodation formed in this section of the

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Photography Adrian Houston

building is called “The Doo’cot”, reflecting the former use of this area of the building as a private Dovecot. The other new cottage is named “The Dairy”, for obvious reasons, while the two main entertaining spaces sitting alongside the Pump House bar are the Hayloft and Threshing Barn, reflecting the rich agricultural heritage. Rosebery Steading is complemented by two further charming cottages, a short walk from the buildings.

The conversion works were not without their challenges. While addressing pointing and lightning conduction repairs the original bell was discovered

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within the clock tower in a sealed off space. The bell had become detached from its fixings and had dropped onto two beams below, only hanging on from crashing down through the room below by a thread. The technical challenge of rehanging the bell was achieved despite extreme constraints and a new tolling mechanism installed to sound the bell again for celebrations. The location of the controls remains closely guarded, to prevent any middle of the night mischief for newly-weds! On the west side of the building, excavations to form foundations for the new toilets revealed a cavernous hole where the old mill

wheel once stood, nearly swallowing up the excavator machine. Many of the original internal features have been retained giving it a rustic feel, while full catering and toilet facilities have been discreetly created.

The buildings had been well used for many generations as agricultural buildings so there was a large degree of deterioration, with structural repairs being required, and all areas having to be re-roofed and modern services integrated into all buildings, including a small district heating system. Any modern building and events venue has to be well serviced. Together with full

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The buildings had been well used for many generations as agricultural buildings so there was a large degree of deterioration... heating and ventilations systems and a full fire alarm system, specialist lighting has been installed inside and out, resulting in stunning day and nighttime options for different themes and moods. Fire safety is another major concern, especially for rural property, so a new fire hydrant was installed to complement the new safety systems.

The result is a quite stunning set of spaces, adding to the portfolio of Rosebery venues (see www.roseberyvenues.co.uk for more details).

The conversion of Rosebery Steading builds on the work of the Building Surveying and Commercial teams at Galbraith who are working with the Estate on a number of properties.

Continuing the conversion and repurposing of former agricultural or redundant buildings is an important new revenue stream, as the estate adapts to the changing landscape of the rural economy.

The building was completed in 2020, having been delayed by the halt to construction works as a result of the Coronavirus pandemic. The business landscape for commercial wedding

venues has had a tough time, however, with the easing of restrictions at the end of the pandemic, and another venue to add to the portfolio, all of the Rosebery Venues are well placed to meet the pent-up demand for celebrations and events, which have not been allowed for such a long time. n

Martin Cassels 07887 484 057 martin.cassels@galbraithgroup.com

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Textbook: The principles of commercial management The Galbraith Commercial team outlines the core principles of commercial property management, asset management and corporate real estate management.

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he Galbraith Commercial team manages more than £450 million of commercial property across the UK, covering all sectors of the market, from stand-alone retail units, neighbourhood retail parades, retail warehouses, to large multi-let offices, and single and multi-let industrial properties.

Our team are all fully qualified RICS professionals and our surveyors work closely to deliver a range of distinct but integrated property services. We demonstrate the core commitments, duties and skills deployed across our wider commercial management business. Intersecting these specialist areas are shared principles and commitments. n

Commercial Property Management Focuses on the day-to-day running of properties. Read the case study on Duckburn Industrial Estate, Dunblane on page 20.

Core commitments Manage the property on behalf of the landlord.

Manage third party suppliers to carry out those operations that property managers do not do themselves.

Provide a primary duty of care to the landlord, secondary responsibility to the occupiers and, in some cases, a duty of care to parties providing finance for the properties being managed.

Core duties Includes a mix of property & financial management: Property Management • Regular liaison and management reporting to the landlord

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• Instruct/manage third-party contractors to perform regular/reactive maintenance

Financial Management

• Monitor/manage PPMs

• Debt recovery process & actions

• Health & safety/fire safety compliance • Facilities Management

• Liaise with tenants/respond to issues raised by the tenant

• Select/manage on-site staff

• Lease management & compliance

• Building Insurance recharging & procurement

• Rent, insurance & service charge (where relevant) demand & collection

• Energy management & sustainability initiatives • Monitor lease events

• Regular property inspections & face-to-face tenant meetings

• Ensure tenant & statutory compliance

• Set/implement service charge budgets

• Review & respond to tenant applications

• Timeous rent, insurance & service charge collection

• Financial analysis & reporting • Agree expenditure & income budgets with client in advance • Client VAT reporting • Service charge budget v actual reporting & timeous service charge reconciliations • Electricity Recharging – including creation of Carbon/CCL Certificates to meet tenants’ carbon data requirements.

• Deposits.

Alison McLean

Yvonne Hay

Pamela Gray

Commercial Property Management 07920 495 413 alison.mclean@galbraithgroup.com

Commercial Property Management 07917 424 363 yvonne.hay@galbraithgroup.com

Commercial Property Asset Management 07766 508 960 pamela.gray@galbraithgroup.com

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Commercial Property Asset Management Focuses on adding value to the real estate investment. Read the case study on Ardmore House, George Street, Edinburgh on page 21.

Skills required • Knowledge of market & client’s asset • Understand client’s key drivers & aims for asset including short/long-term hold, rental & capital enhancement etc • Develop close relationships with tenants, understand aims & aspirations • Identify synergies between landlord & tenant to create asset management opportunities

• Focus on tenant retention, maximise lease length, minimise voids/void holding costs & driving rental performance • Track all lease events & negotiation of new leases, lease re-gears, lease extensions, lease surrenders, rent reviews • Input to service charge budget setting/PPM compliance • Identify/manage refurbishment works

Shared Principles: • Client care • Regular communication • Proactive not reactive • Market experience • Acting with integrity Shared Commitments: • Understanding client’s objectives • Agreeing the strategy • Regular engagement with stakeholders • Finding solutions • Mitigate cost liabilities • Property, leasing & financial diligence • Drive asset performance

• Regularly report to client/client’s legal team • Prepare competition schedules, investments analytics & up-to-date occupier requirements for accurate client reporting & to support recommendations • Act as de-facto client in appointing other professional advisors, e.g. dilapidations assessments; contract administration; project monitoring • Liaise with client’s bank/lenders as required.

Corporate Real Estate Management Strategy • Property/portfolio estates must meet occupier’s operational needs & be aligned with the wider business plan.

• Strategies are often led by finance/operational teams but should include property specialists for both freehold & leasehold interests.

• Strategy can be high-level but successful implementation will need to cover a spectrum of property assets, small or large, from UK-wide estate planning through to local level facilities.

Considerations • Freehold & leasehold occupation should be reviewed on merit • Leasehold portfolios should be constantly reviewed in-line with market trends considering threats & opportunities

Will Sandwell Corporate Real Estate Management 07801 266 373 will.sandwell@galbraithgroup.com

• Tenants (& their advisors) should not wait for a lease event to engage with a landlord, most landlords welcome tenant engagement

• The management of an owneroccupied estate should not be overlooked • In the case of multiple sites within an estate, data management is key.

Key Themes For Success • Mismanagement of key dates/lease notifications can be costly for occupiers • Regular inspections/portfolio review by property professionals always pays dividends • Always have “a view” of the market • Leasing versus ownership (or temporary ownership) should always be explored. Financial reviews are required to explore revenue cost (rent), cost of capital (to purchase) or capital receipt (the sale of an asset).

• There is no hard rule between full service or ad-hoc corporate real estate advice & the requirement will change with portfolio size. However, early engagement with property advisors & longer-term relationships often results in more efficient portfolios.

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Case Studies Commercial Property Management Case Study:

Duckburn Industrial Estate, Dunblane

Galbraith has managed Duckburn Industrial Estate, Dunblane since 2002. It comprises two single-storey terraces of business units, constructed in brick with profile sheet roofing. Each terrace contains eleven units with an overall floor area of c. 25,704 sq ft.

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he Estate accommodates a variety of businesses and benefits from an excellent central location in the heart of Scotland, which allows easy access to both Glasgow and Edinburgh within an hour’s drive.

It can be challenging with so many different business types in one area to keep every tenant happy; some may be open to the public and have regular visitors to the unit, others may be a quasi-office base. Differences in the way businesses work can result in management issues such as parking, waste uplift or noise.

Real estate management of a commercial site such as this includes overseeing a service charge which relates to the maintenance, health & safety and estate management of the common areas. We set an annual budget in advance, instruct contractors and carry out all financial processes in relation to the day-today running of the shared area. Upon expiry of the service charge year, we complete a service charge reconciliation and report to the tenants and landlord. It is vital that we review the expenditure throughout 20

the year to ensure we are on track and monitor cash flows.

As managing agents we are also responsible for rent and insurance collection and as a firm we pride ourselves on having very few arrears or indeed late payers.

To effectively manage such an estate it is essential that the managing agent has a good working relationship with the tenants which starts with regular communication.

Consistent contact and dealing with any issues that arise quickly and effectively makes for happy tenants who are more likely to renew or extend their leases and reduce the risk of voids. With so much correspondence taking place online, face-to-face meetings with tenants are vital (where safe and appropriate to do so) to help develop a good relationship with the management surveyor. This can make situations easier to deal with for both sides.

Ensuring that all tenants are aware of their responsibilities has resulted in a thriving estate with low tenant turnover.

Tenants generally respond well to landlords who take an interest and are responsive to their needs. The landlord, in turn, expects their tenants to pay their rent and service charge timeously and to comply with their lease obligations. From the management perspective, transparency is critical and compliance with the RICS Service Charge Code essential in a wellmanaged estate.

Our mission statement is to have our managed assets ready for sale at any time, even though most of our clients hold their investments on a long-term basis. This ethos ensures that our management portfolios are fully compliant, lease covenants are being adhered to and service charge reconciliations are completed timeously.

We find our tenants respect this professional approach and this is reflected in their attitude to the management team. n

Alison McLean 07920 495 413 alison.mclean@galbraithgroup.com

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Commercial Asset Management Case Study:

Ardmore House, George Street, Edinburgh Ardmore House comprises a mid-terrace city centre office arranged over six floors of mainly open plan space behind a period façade.

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he offices benefit from the following specification: comfort cooling; suspended ceiling with LG7 lighting; perimeter trunking system; Cat 5e network cabling; door entry security system; shower facilities; male and female WCs on every level; full lift access; excellent natural daylight throughout and secure car parking within the basement.

The building is multi-let with six separate leases in place.

terminal dilapidations, refurbishment works and, ultimately, setting the quoting rental and marketing campaign.

When landlord and tenants work collaboratively, it can benefit all parties.

Happy tenants tend to renew leases rather than relocate, which is also much more cost effective and avoids business disruption. From the landlord’s perspective, fully occupied buildings help drive investment performance. The skillset required to be an effective Asset Manager is wide and varied. The overriding objective is always about adding value but this can take many forms. First and foremost an Asset Manager needs to be an effective communicator to ensure all stakeholders understand the vision and can see the benefits. They need to be able to identify and oversee project work; to have a detailed understanding of commercial leases; be closely involved with the Property Management team in service charge budget setting while also undertaking lease re-gears, lease renewals and rent review negotiations to drive rental performance, improve the WAULT (Weighted Average Unexpired Lease Term) and, consequently, increase value.

The Asset Manager will also oversee the letting process from the instruction of

charge budget. Great care was taken to ensure transparency, demonstrate best value and to ensure compliance with individual lease provisions, liabilities and apportionments. Most occupiers appreciate having a landlord who adopts a measured approach to the ongoing maintenance and care of their assets and the results have been unilaterally welcomed by the tenants.

When first involved at Ardmore House I instructed a PPM (Planned Preventative Maintenance). The PPM drives and shapes the maintenance regime over a period of time to keep the fabric, facilities, plant and equipment of a building in good operating condition. It also allows detection and correction of failures, I have been involved in a number of asset either before they occur or before they management initiatives at Ardmore House develop into major defects while over the last two years since instructed. identifying the point at which certain An effective Asset Management strategy items have reached the end of their requires a full understanding of the economic life. landlord’s aims and aspirations. It also In this case the PPM highlighted the depends on their investment objectives redecoration cycle of the common parts and whether the asset is intended to be a and the common WCs was overdue, as short-, medium- or long-term hold. In this well as the need to move to LED lighting case the client’s overriding objective is to throughout. In addition, there were health maximise tenant retention by continuing and safety issues with the common to invest in the building, the fabric and the staircase balustrade and handrail, which common facilities and to ensure that ESG necessitated their replacement. These (Environmental, Social and Governance) works were all undertaken and completed initiatives are placed front and centre of within the strictures and governance set all future initiatives. down by the RICS in managing a service

The next project will incorporate the provision of more dedicated bicycle racks within the secure car park, heated locker rooms, changing areas, and welfare facilities plus EV charging points for bikes and cars.

In tandem with these project works, I have negotiated various rent reviews, lease renewals and lease restructuring deals with existing tenants. We are also about to commence the marketing of the third floor suite. This will be fully refurbished and should be available for occupation by mid-September 2021. We have achieved 20 % rental growth within the building in the last two years. Ardmore House occupies a 100% prime office

location and these asset management initiatives have contributed to the provision of a well maintained, contemporary office with excellent facilities, which bodes well for our forthcoming letting campaign and ultimately the value of the client’s asset. n

Pamela Gray 07766 508 960 pamela.gray@galbraithgroup.com 21

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Planning

Need to Know: Changes to Statutory Pre-Application Consultation Requirements in Scotland Nicola MacGruer sets out the upcoming changes for major and national developments.

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mportant changes to the statutory requirements for pre-application consultation (PAC) for major and national scale developments are due to come into effect on 1 October this year.

Under the current system, the first step is to serve a proposal of application notice (PAN) on the relevant local planning authority (LPA) detailing the location and nature of the proposal and the consultation that will be carried out.

The LPA has 21 days in which to respond either approving the extent of consultation proposed or requiring additional activities to be undertaken. A minimum of 12 weeks must pass from the PAN being served before the planning application can be submitted.

During this time, prospective developers must hold a public consultation event (although the usual requirement for this to be in-person and face-to-face is currently temporarily suspended due to the Covid-19 pandemic). They are also required to consult with the relevant community council and publish a notice in the local press. When the planning application is submitted, it must be accompanied by a PAC report. Currently the content of such reports is the subject of guidance.

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The Town and Country Planning (PreApplication Consultations) (Scotland) Amendment Regulations 2021 come into force later this year and are part of a wider package of measures to improve community engagement in planning matters and build public trust.

The key difference is that as of 1 October 2021 a minimum of two inperson public events will be required, with at least 14 days between the first and final event. Each event must be advertised in the local press. At the final event, prospective developers will be required to provide feedback to the community on the comments made at the preceding event(s). To enhance community involvement, prospective developers must also make information available by electronic means. The content of the resulting PAC report will also be subject to statutory requirements.

The Regulations also provide for an exemption from PAC requirements where a proposal is similar to, or part of, a previous planning application where PAC was carried out. For example, where a planning application is withdrawn or refused and then amended and resubmitted, then new

PAC will not be required. To benefit from this exemption, the subsequent application must be made within 18 months of the original application being submitted.

Transitional arrangements are in place where a PAN is served prior to 1 October 2021, the earlier PAC requirements will continue to apply.

When properly conducted, early engagement with local communities and statutory consultees reaps positive rewards. Experience suggests that stakeholders are more likely to ‘buy in’ and support development proposals if they are fully engaged and involved in the planning process early on.

The Galbraith approach seeks to build trust through genuine pre-application community engagement which is tailored to the nature and scale of development proposed. Our planning team is available to provide expert advice with any planning-related matters. n

Nicola MacGruer 07899 914 865 nicola.macgruer@galbraithgroup.com

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The Resilience of Convenience Retail

Jamie Addison-Scott 07824 435 094 jamie.addison-scott@galbraithgroup.com

Jamie Addison-Scott on why convenience stores are the good news story of retail during Covid.

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he retail sector in general has been on the receiving end of some bad press recently, especially over the last year with the pandemic accelerating the move from “bricks and mortar” to online retailing. However, there have been exceptions, one being the resilience of the convenience retail sector.

Convenience stores, whether they are standalone or part of a neighbourhood parade, have become even more popular during the pandemic. One of the primary reasons for their recent success is that a high proportion of shoppers opted to avoid travelling further afield and waiting in long queues at supermarkets, preferring to visit their local neighbourhood stores instead.

In addition, with the vast majority of the country working from home, local convenience retail caters for more flexible working patterns as work / life patterns change.

Even as city centres start to re-populate, including office occupiers, the trend for more regular,

convenience spend for fresh produce, coupled with online delivery for more bulky items, is here to stay.

This trend is evident to property investors and the sub-sector is proving to be resilient to the pressures of online shopping. Rent payment histories have remained positive, being backed by large corporates, in some cases FTSElisted. Tenant expansion is now evident with multiple operators having live requirements for small format stores. The popularity of this investment type has been reflected in yield compression of well-configured modern format convenience stores, which are commonly newly built with generous car parking and indexlinked rent review provisions.

Some examples are shown in the table below.

The result is a small lot size investment which offers long secure income, let to a national tenant covenant, with inherent occupier demand that is demonstrated via everyday trends. Ultimately, such

Date

Location

Tenant

Lease Length

Price

Yield

Mar 2021

Aberfoyle

Co-op

15 yrs

£1,425,000

5.76%

Mar 2019

Symington

Co-op

15 yrs

£757,000

5.64%

Jan 2018

Newbridge

Co-op

15 yrs

£925,000

6.15%

Jun 2017

Gretna

Co-op

15 yrs

£980,000

6.52%

properties offer a risk investment profile often only seen in larger supermarket stores which might be £20m plus in lot size and therefore only accessible to traditional institutional investors.

Galbraith have identified and acquired a number of convenience store investments in recent years, for private investors, pension/SIPP requirements and property companies who can use the long income as a diversification tool as part of a portfolio. n

... the trend for more regular, convenience spend for fresh produce, coupled with online delivery for more bulky items, is here to stay.

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Offices across Scotland & Northern England

Contacts Jamie Addison-Scott Investment agency jamie.addison-scott@galbraithgroup.com 0131 240 2287 | 07824 435 094 Martin Cassels Building Surveying martin.cassels@galbraithgroup.com 01786 435 044 | 07887 484 057 Ben Dobson Agency ben.dobson@galbraithgroup.com 0131 240 2288 | 07584 336 085 Pamela Gray Asset management, lease advisory, professional & valuation, service charge consultancy pamela.gray@galbraithgroup.com 0131 240 6963 | 07766 508 960 Yvonne Hay Property management yvonne.hay@galbraithgroup.com 0131 240 6960 | 07917 424 363 Richard Higgins Investment, agency, asset management, professional & valuation richard.higgins@galbraithgroup.com 01786 434 625 | 07717 581 741

Nicola MacGruer Agency, professional & valuation, planning nicola.macgruer@galbraithgroup.com 0131 240 6968 | 07899 914865 Alison McLean Property management alison.maclean@galbraithgroup.com 0131 240 6981 | 07920 495 413 Pam Over Project development and coordination, asset management pam.over@galbraithgroup.com 0131 240 6965 | 07867 977 631 Will Sandwell Investment agency will.sandwell@galbraithgroup.com 0131 240 6997 | 07801 266 373 Peter Scott Aiton Building Surveying peter.scottaiton@galbraithgroup.com 0131 240 6967 | 07917 220 781 Harry Stott Agency, professional & valuation, strategic land harry.stott@galbraithgroup.com 01786 434 630 | 07909 978 644

Calum Innes Agency, planning, project coordination, professional & valuation

Jamie Thain Investment agency

calum.innes@galbraithgroup.com 01738 456 075 | 07909 978 643

jamie.thain@galbraithgroup.com 0131 240 6994 | 07798 647 620

Expertise Galbraith operates from 13 offices across Scotland and Northern England bringing our clients a wealth of experience in: • Residential estate agency • Property lettings • Commercial property sales & management • Estate, farm & forestry sales & acquisitions • Estates, farming & land management • Natural capital • Renewables and utilities • Building surveying • Commercial forestry & woodland management