Property experts have reveaed an uptick in office market in and around Aberdeen during the third quarter of 2023.
Take-up over the three months totalled 141,789sq ft, reflecting a 167% jump on the previous quarter’s 53,091sq ft figure and 196% increase on the same period in 2022.
It brings total take-up for the year to date, after a subdued first six months, to 258,431sq ft.
The Q3 2023 figure was achieved across 29 deals, with the largest transaction being Odfjell Technology’s 19,464sq ft letting at Prime View in the Prime Four business park at Kingswells.
It is encouraging to see an uptick in office activity following on from a reasonably quiet start to the year.”
Matthew Park, Knight Frank.
Office market giant CBRE, which was involved in the Odfjell deal, said there were multiple sub-lettings at Prime View, totalling nearly 35,000sq ft, in the third quarter.
SSE and Cegal acquired 9,990sq ft and 5,694sq ft respectively in the building and, as a result, space at Prime Four – one of Aberdeen’s premier out-of-town business locations – is now “extremely limited”.
Other major Q3 deals included Kellas Midstream taking 10,149sq ft at the Capitol on Union Street and COSL Drilling’s 6,550sq ft move into the iQ building in the city centre.
CBRE also reported a continued fall in office availability in and around the city, with supply now sitting at around 2.12 million sq ft. This is down from 2.51m sq ft in the previous quarter and the lowest total since 2015.
Grade A accommodation in Aberdeen remains in even shorter supply, with about 206,500sq ft available amid continued strong demand for best-in-class space in the Granite City.
‘Best-in-class’ space in short supply
Dominic Millar, an apprentice surveyor in CBRE’s Aberdeen office, said: “After a slower start to the year, the Aberdeen office market has bounced back with an encouraging third quarter of occupational take-up, surpassing the total for the first half of the year.
“We expect this letting activity to continue into the last quarter of the year.
“However, this upward trend will likely come up against a lack of new Grade A development as Aberdeen faces a shortage of new, best-in-class office space. Since completion of schemes such as The Capitol, Marischal Square and the Silver Fin building in 2018, there hasn’t been any significant new office development.”
Mr Millar added: “With an office stock figure of 10.3m (sq ft), the new Grade A vacancy rate is a low 2%.”
“With little development coming out the ground, the focus will be on landlords refurbishing older stock to meet the increased occupier demand for best-in-class, ESG (Environmental, social, and governance-compliant space.”
The Aberdeen office market has bounced back with an encouraging third quarter of occupational take-up.”
Dominic Millar, CBRE
Commercial property experts Knight Frank said the majority of deals agreed in the third quarter involved companies in the energy and utilities market, with their commitment to the Granite City “underpinned by the sustained higher oil price”.
Knight Frank said Aberdeen’s west end remained a “favourable” location, seeing the most transactional activity in 2023,
West end revamps boosting Aberdeen office market
More than two-fifths of office deals have involved west-end properties, Knight Frank said, adding the area’s popularity was due in part to recent refurbishments and investments, bringing traditional listed buildings in line with modern occupiers’ requirements.
New features include revamped common areas, as well as improved energy efficiency measures.
Matthew Park, partner in the Aberdeen office of Knight Frank, said: “It is encouraging to see an uptick in office activity following on from a reasonably quiet start to the year.
“With a flurry of deals completed this quarter, we are cautiously optimistic the market is back on track for a strong end to 2023.
““The sustained high oil price is undoubtedly giving the city a boost, with more companies committing to high-quality office space across Aberdeen. The flight to quality remains high on the agenda for any businesses considering new space.
“And it is great to see the results of landlords’ hard work and investment in the west end beginning to attract new occupiers.”
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