City property market still on the up

UPLIFTED: Ian Landsman of CBRE says he has been encouraged by the increase in take-up last year
UPLIFTED: Ian Landsman of CBRE says he has been encouraged by the increase in take-up last year

The industrial market in and around Aberdeen continues to show healthy signs of recovery, with the highest number of deals in a decade taking place during 2018, CBRE said yesterday.

New research from the commercial property giant has revealed take-up totalled 658,000sq ft last year, which was in line with the five-year average and an increase of more than 14% from 2017.

CBRE said smaller deals dominated during 2018, with sub 10,000sq ft lettings accounting for 73% of all transactions.

The two largest deals were both in Westhill, with TechnipFMC and Proserv acquiring industrial facilities extending
to 34,200sq ft and 59,800sq ft respectively.

CBRE said there were 80 deals in total last year, the highest number seen in the past 10 years.

Industrial supply levels at the close of 2018 stood at 2.43m sq ft, a rise of 7% from 2017, which CBRE said was an “encouragingly more conservative” increase than in previous years and a further sign the market may be levelling out.

Iain Landsman, associate director in the Aberdeen office of CBRE, said: “On the back of a few challenging years, 2018 saw positive sentiment return to the market.

“The uplift in the wider energy sector is now filtering through to the commercial property sector, with many service companies now having the confidence to make property decisions and using the market conditions to relocate to better quality or more prominently positioned properties.”

But he added: “While it appears a corner has been turned in the market, the vacancy rate is just under 22%.

“Landlords still face many challenges with much of this empty stock being burdened by over-provision of office space.”

Mr Landsman said business rates for empty industrial buildings continued to “add to the problems landlords face”.

This was causing a sharper fall in rents, especially in poorer quality second-hand stock, he said.

He added: “Occupier demand still remains strongest for properties which present well.

“With such a wide selection available to occupiers just now, we are recommending that landlords invest capital in their property to get them as close to walk-in condition as possible.”

The market is seeing speculative development for the first time since the oil and gas downturn,

Mr Landsman said, adding: “There are also a number of larger requirements for occupiers considering bespoke developments.

“We’re definitely more upbeat about the performance of the industrial market in Aberdeen.”