Upbeat outlook for Aberdeen office property market

Aberdeen's office market continued its 'steady' performance in the closing months of 2018, though the total take-up of space remained below 2017 levels, new research shows.

Marischal Square is one of the city's major developments. Picture: Contributed

Figures from property adviser CBRE Scotland show that office market take-up in the final quarter of 2018 amounted to 79,942 square feet, bringing the annual total to 355,148 sq ft.

This is slightly down on the 405,000 sq ft recorded for 2017, which was bolstered by the letting of 138,000 sq ft at Westhill’s Subsea 7 building by oil major Total.

The final three months of 2018 saw the Granite City’s largest deal of the year, with serviced office provider Spaces acquiring 26,300 sq ft in 1MSq at Marischal Square, where it will open its first Aberdeen site.

Further lettings at Marischal Square during the second half included 9,975 sq ft to the NHS and 8,452 sq ft to global oil and gas supply company Tenaris, while other significant deals saw Noble Drilling acquire a 16,591 sq ft speculative office building at ABZ Business Park, and Ineos acquire 9,702 sq ft at Prime Four business park’s Prime View.

Derren McRae, managing director of CBRE in Aberdeen, said: “From a commercial property perspective, there has been a generally more upbeat feel to the Aberdeen market in 2018. We have continued to see letting activity take place in the best quality office buildings such as Marischal Square and The Silver Fin Building.

“Encouragingly take up has generally been dominated by energy sector companies taking the opportunity to move to better quality buildings in more desirable locations.”

He added: “Looking ahead to [the remainder of] 2019, a number of factors are expected to strengthen letting activity in the city.

“The long awaited opening of new ring road, the Aberdeen Western Peripheral Route (AWPR), offers improved accessibility to out-of-town locations and we expect to see an increase in letting activity as a consequence of completion of the AWPR.

“Additionally, a joint venture between Codebase and Opportunity North East to create Aberdeen’s first digital hub will add a new tech dynamic to the city centre when it opens in 2019.

“Combined with the recent opening of the Sandman Signature Hotel, the imminent completion of residential development The Point, and refurbishment of Aberdeen Art Gallery, we are of the view this renewed vibrancy in the city centre will appeal to office occupiers.

“With the premium floors of new Grade A developments letting up, we also anticipate occupiers with lease events in 2020 and 2021 looking to expedite relocations to ensure they secure the best remaining space,” added McRae.