Aberdeen office market continues to improve

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The Aberdeen office market has continued its steady start to 2018 into the second quarter with a further 89,776 sq ft of office space transactions, almost mirroring take-up in the first quarter (88,774 sq ft) and bringing the total take-up for the first half of the year to 178,550 sq ft.

There have been 50 office market deals transacted over the past six months which is up 67% from this time last year.  The largest letting of H1 2018 was 19,000 sq ft to Aberdeen Journals which secured the top floor of 1MSq, Marischal Square, representing a return to the city centre for the publisher after an absence of almost 50 years having moved operations from a nearby site to out of town in 1970.

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Marischal Square
Marischal Square

Demand from the energy sector has been encouraging which is evidenced by the recent lettings to BWO Offshore, securing 10,325 sq ft in Horizons House, Ping Petroleum taking 8,777 sq ft at Caledonian House, Verus Petroleum and CATS Management taking 6,079 sq ft and 4,193 sq ft respectively in The Silver Fin Building and most recently the announcement of Serica moving to a 7,730 sq ft suite at H1, Hill of Rubislaw.

Recent take-up also indicated there is activity in the banking sector with RBS relocating from the West End having secured the 7,000 sq ft top floor of 2MSq, Marischal Square and Barclays joining some of the aforementioned occupiers after securing 3,100 sq ft on level 6 at The Silver Fin Building.

H1 2018 set a new record headline rent of £32.50 per sq ft in Aberdeen which was achieved at The Silver Fin Building and is expected to be maintained in future transactions. Incentive levels will remain for the best quality space and will move out for secondary stock as there is a large amount of supply to be absorbed.

Amy Tyler from CBRE’s Aberdeen office commented:  “We have certainly witnessed an improvement in sentiment in the Aberdeen office market during the first half of 2018. This is mainly attributed to the increase in oil price, which peaked at just under $80 per barrel at the end of June from circa $65 per barrel at the start of the year.  This is beginning to filter through to the office market where we have experienced an encouraging increase in demand for space.

“We are expecting a strong start to the second half of the year with a number of transactions already due to complete over the next couple of months. This take-up will come from a mix of public sector bodies and energy sector operators looking to improve their working environment on lease expiry of current buildings.

“As positive progress continues with various key developments of Aberdeen’s City Centre Masterplan we anticipate there will be growing occupier interest for good quality, city centre space.  However, we also believe there will be increased activity in out of town locations against the backdrop of the first section of the AWPR recently opening.  As this reaches full completion we expect this will have a positive impact on occupiers as they may consider looking further afield at locations they previously dismissed due to better accessibility and improved commuter times.”


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