Demand for office space in Aberdeen plummeted last year amid an “incredibly tough time” for the sector, and following a record 2014, according to a study by Knight Frank.
In its Aberdeen Office Market Activity Report the property firm found a 61 per cent year-on-year drop in take-up, and an 82 per cent fall in investment volumes, as dropping oil prices took their toll. The city was one of only two UK locations, the other being Bristol, to post negative figures.
Meanwhile, supply in the North-east of Scotland headed towards record levels, and while available office space in the Granite City sits at more than two million square feet, office take-up in 2015 totalled just 401,000 sq ft.
Knight Frank partner Eric Shearer said: “In any market, a fall in demand coupled with an increase in supply represents a significant hurdle, and that is exactly what we faced in Aberdeen in 2015.
“That will continue in 2016 and it would be remiss to attempt to put any gloss on the data our research team has published today: the figures speak for themselves. The most important thing is to use the information to focus minds and ensure a positive response.
“Those of us involved in the Aberdeen market have been through difficult cycles in the past and at Knight Frank we are committed to working through this one on behalf of our clients.”
He added that given take-up levels have dropped to about those seen in 2010, “so to suggest it is a complete collapse of the market would be wrong. That said, nobody is burying their head in the sand and this is an incredibly tough time”.
• Property agency Savills has posted better-than-expected full-year profits and hailed a solid contribution from its Scottish practice, writes Scott Reid.
The firm, which operates globally, said that underlying profit had risen by 21 per cent rise to £121.4 million in 2015 as it benefited from expansion across the US and growing profitability in Europe. Group revenue was up 19 per cent to just under £1.3 billion and the total dividend for the year up 13 per cent to 26p per share.
Nick Penny, head of Savills Scotland, said: “Savills success in Scotland has seen us continue to grow our business.
“Scotland’s commercial market has benefited from the continued growth in investor interest in regional markets outside London, with increasingly more non-domestic money chasing trophy assets.”