Aberdeen office market eyeing boost from oil price as letting activity rebounds

Aberdeen’s office market has witnessed a “relatively positive” first half as it continues to recover from the effects of the pandemic with the high oil price expected to further buoy activity, new figures suggest.

Some 60,000 square feet of space was transacted in the second quarter between April and June, according to Knight Frank.

The activity for the last three months takes the total take-up for the first half of 2022 to 250,000 sq ft - a substantial increase on the 55,597 sq ft let in the equivalent period last year, when the market was heavily impacted by the fallout from Covid-19.

April to June’s 60,000 sq ft was also more than double the 26,695 sq ft transacted during the same quarter in 2021. The biggest deal of last quarter was Orega’s agreement to manage 15,000 sq ft at Aberdeen’s Silver Fin Building.

Eric Shearer, head of office at Knight Frank Aberdeen, said: “It’s been a relatively positive first half to the year, with the deal at the Silver Fin Building giving a real boost to the office market. While there is typically a lull as we head into the summer holiday season, there are enough deals on the horizon for the second half to remain cautiously optimistic about the six months ahead.

“The oil price is helping to buoy activity in the industrial market, but it is yet to truly filter through to offices. We hope that will change in the remainder of 2022 and into 2023, with the oil price forecast to remain high for some time yet, acting as a further catalyst to the office market’s recovery.”

Meanwhile, property advisor CBRE has released its latest figures on the Aberdeen office market, which largely mirror the Knight Frank ones.

CBRE said total take-up in the first half of the year was 256,426 sq ft, a 361 per cent rise from the same period in 2021.

Aberdeen's office market has been examined by property firms Knight Frank and CBRE in their latest reports.

The firm said that encouragement should be taken from the city’s continued falling office availability, with supply now sitting at 2.6m sq ft, down 3 per cent from the previous quarter and down 9.2 per cent year-on-year. Grade A space within the city remains in shorter supply, with it sitting at approximately 300,000 sq ft.

Amy Tyler, associate director from CBRE in Aberdeen, said: “Not since 2015 has Aberdeen’s office market witnessed such high levels of occupier take-up in the first six months of the year. The city has always been, and will continue to remain, an attractive location for occupiers to be based in.

“As the world migrates towards renewable energies there is perhaps no city better placed to embrace this change, with Aberdeen already a leading figure in the development of sustainable energy. Looking ahead, we envisage there being a substantial increase in demand for office space within this sector, especially as the city remains a great place to live and work.”

Other notable deals recently include Craig International taking 9,149 sq ft of space at Tern Place, Bridge of Don.