There’s much talk of the ‘V&A effect’ in 2018, and great optimism about it putting Dundee on the map. But what exactly is the effect on commercial property markets and rents in Dundee and Tayside?
The year has certainly started with a surge of commercial property enquiries – both from owners wanting to let space and businesses wanting to rent it. The retail market is healthy, and the stream of further announcements about the £1bn regeneration may stimulate all elements of the commercial property market.
In particular, the grant of planning permission for 60,000 sqm of grade A office space at Site 6, next to the V&A, and the prospect of 3m additional visitors from 2018 to 2028 will put Dundee’s commercial possibilities in the minds of regional and national businesses.
Progress on tech entrepreneurs Chris van der Kuyl and Paddy Burns’ Water’s Edge project at City Quay will also generate great publicity for Dundee. This in turn will help keep ambitious tech companies and other early-stage businesses in the city – as will Studio Dundee, near the rail station.
The combination of having new office space available and the more vibrant image of Dundee being fostered by the V&A and Water’s Edge openings, will support further growth in the gaming and tech sector in Dundee.
But what’s happening beyond the Waterfront? In terms of retail space, the V&A opening is prompting a drift towards it – with retailers relocating from more distant shopping centres towards Union Street and the water.
At the same time, shopping centres and other landlords well away from the Waterfront report national firms expanding their footprint in wider Dundee and Tayside. In this respect, the V&A opening is less about a magnet effect, more about a ripple effect.
But despite the buzz, rents in the city remain substantially lower than in Edinburgh and Glasgow. Part of this stems from the office stock: by creating grade A space at Site 6, the council may attract firms to Dundee, and therefore stimulate the wider market too.
In addition, the headquartering of the Scottish social security agency (with a requirement for up to 85,000 sqm of space) in Dundee should invigorate the market, and attract other organisations.
But another view is that having 68,000sq m of new space on the Waterfront, which is not yet taken, may put downward pressure on office rents in a city that already has substantial amounts of empty space.
What these mixed views really add up to is that it’s too early to call. They suggest the commercial property market in Dundee is neither a landlord’s market nor a renter’s market, but a negotiator’s market.
With no trend yet established for post-V&A Dundee’s rents and markets, it’s all about the deal – knowing the details of the market, the space, the competition, how to get a good price (whether you’re letting or renting), and what else is out there. That may well make 2018 an excellent year for businesses in Dundee.