According to the latest figures from property consultancy CBRE Scotland, take-up of office space in Aberdeen in 2017 has been recorded at 405,000 sq ft, representing an 85% increase from 2016.
Derren McRae, Managing Director of CBRE’s Aberdeen office, commented: “There certainly appears to be an improved level of positivity since returning to our desks this January when comparing market sentiment at the start of recent years in the city. Undoubtedly the increased office take-up levels over 2017 are a factor in this, coupled with the steady improvement in oil price which is encouragingly hovering around the $70 per barrel mark.
“Looking back on 2017, the two headline transactions were, Total relocating from Altens to acquire a surplus 138,000 sq ft Subsea 7 building at Westhill, and Chrysaor taking the majority share at The Capitol with 48,000 sq ft across four floors. Both lettings are testament to infrastructure improvements and recent speculative commercial development.
“The Chrysaor move from Altens to The Capitol shows a positive commitment to both Union Street and the city centre – this is the first time a large oil operator has moved staff from an out of town location back in to the city centre.
“However with the AWPR nearing completion, we are seeing occupiers being prepared to relocate a significant distance to alternative locations of the city for better quality office accommodation, when previously there would have been major resistance to move from one out of town location to another.
“We believe some of the initial key Aberdeen City Council masterplan projects, general improved level of goodwill and availability of quality modern space are helping to change occupier’s perception of the city centre. Looking forward to 2018 we anticipate good levels of take-up in the likes of Marischal Square and The Silver Fin Building, which have both now reached practical completion. We are also seeing encouraging levels of interest in some Grade B space in the city centre, especially in situations where an office is fully fitted out and in ‘plug and play’ condition. The serviced office market is very much a growth sector across the UK and we predict the new business centres such as Orega in The Silver Building and Citibase on Queens Road will continue to attract occupiers who want the flexibility of being able to grow, or shrink, with relative ease over the coming years within high quality office space.
“The Western Corridor remains an attractive proposition for occupiers. West end buildings where rental levels have been re-based are still proving attractive to occupiers, particularly where open plan space can be provided. We also anticipate that capital values for less well configured West end buildings will come to a point where residential redevelopment starts to make sense.
“Following considerable investment, H1 at The Hill of Rubislaw has secured Siccar Point Energy and Well-Safe Solutions, in addition to letting 15,000 sq ft to Pure Gym. A number of the larger occupiers in the likes of Prime Four and Westhill are also able to offer some of their ready to occupy surplus office space on flexible lease terms to occupiers.
“Whilst supply levels may still be at a headline grabbing 2.8m sq ft, the fact remains that some of the older stock would have long been redeveloped or converted to alternative use in most other major regional cities across the UK. There has therefore never been a better time for opportunistic buyers to acquire some of the less sought-after stock for redevelopment as occupiers continue on the journey to quality.”