Oil and gas put pressure on Aberdeen offices

By GARETH MACKIE
Published on 05/08/2012 00:00

DEMAND for office space across Scotland has risen strongly so far this year, with new figures showing rents for prime accommodation in Aberdeen may rise above their current record highs.

Property consultancy CBRE said that rent in Aberdeen stands at £31.50 per square foot, compared with £27.50 in Edinburgh and £27 in Glasgow, and the Granite City was beginning to experience a “severe shortage” of availability as the oil and gas industry fuelled demand for space.

Derren McRae, managing ­director for Aberdeen, said: “With the current market demand we have no doubt that prime rents could be improved on over the next six months.

“However, the issue is whether prime grade-A space actually becomes available to achieve a new record rent.”

Of the 2.73 million sq ft of available space in Edinburgh at the end of the first half of 2012, only 18 per cent is grade-A. There is a similar squeeze on good-quality stock in Glasgow, where grade-A space accounts for just 16 per cent of the 2.24 million sq ft available,

However, the shortage of prime stock is even higher in Aberdeen, which has only 5 per cent of grade-A accommodation ready to occupy.

With oil prices remaining above $100 a barrel, Europe’s oil capital is continuing to enjoy investment and work recently began on the Prime Four business park. The 350,000sq ft development will provide offices and training facilities for North Sea giants Apache, Nexen and Transocean.

Stewart Taylor, director of CBRE in Edinburgh, said there was “little in the development pipeline” in the capital, as speculative developers struggled to secure funding.

Rents in Edinburgh are expected to remain stable over the next six months, but CBRE said Glasgow may witness reductions of up to 7 per cent as the current economic uncertainty constrains demand.

Audrey Dobson, senior director in Glasgow, said: “Occupiers will seek to make their properties work harder for them, saving by minimising duplication of functions through consolidating the number of locations from which they operate.”