The take-up of office space in and around Aberdeen has reached its highest level in seven years, new industry figures show.
They also highlight a continuing recovery from the effects of the Covid-19 pandemic during the second quarter of this year. More than 60,000sq ft of space was transacted.
Market experts believe strong oil prices may continue to add impetus to the market for some time to come.
First half take-up up more than fourfold
Office deal activity during the three months to June 30 took total take-up in the first half of 2022 to 256,426sq ft – a big increase on the 55,597sq ft let in the equivalent period last year and the strongest Q2 performance since the start of the pandemic.
The Q2 2022 figure is also more than double the 26,695sq ft transacted during the same period last year.
Biggest deal of latest quarter was Orega’s agreement to manage about 15,000sq ft of office space in the Capitol on Union Street. Orega is moving out of the Silver Fin next door to make way for energy giant Shell relocating into the city centre from Tullos.
Eric Shearer, head of office at Knight Frank in Aberdeen, said: “It’s been a relatively positive first half to the year, with Shell’s 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.”
Mr Shearer added: “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.”
Occupiers in battle for limited Grade A space
Other notable deals in Q2 2022 included Craig International taking 9,149sq ft at Tern Place, Bridge of Don, while Ashtead Technology agreed to sub-let 5,648sq ft at Cumberland House in Westhill.
According to property firm CBRE, encouragement should also be taken from the city’s continued falling office availability.
Supply is now sitting at 2.6 million sq ft, down 3% from the previous quarter and lower by 9.21% year-on-year.
Grade A space in Aberdeen remains in shorter supply, with it currently sitting at about 300,000sq ft – just 2.93% of the total space, as a battle over the best space continues.
The dearth of top quality stock is expected to encourage more landlords to refurbish buildings to meet the demand of occupiers.
Amy Tyler, associate director with 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.”