Dwindling availability at Marischal Square (MSq) highlights a dearth of top-notch office accommodation in Aberdeen city centre, commercial property firm Ryden says in a new report.
A 12,400sq ft suite in MSq is the largest space left in the “grade A” office complex, with only two smaller areas also remaining for prospective tenants.
Meanwhile, the Capitol building on Union Street has only two floors available to let. Each of these totals just over 10,000sq ft.
In its latest Scottish market review, Ryden also says the market for the best quality stock in the west end of Aberdeen continues to improve.
There is undoubtedly demand for the correct office product, where owners are prepared to invest.”
The report, authored by Ryden research partner Mark Robertson, adds: “Following full refurbishments, there is only one suite remaining at Blenheim House.
“Blenheim Gate is now fully let.
“The redevelopment of 3-5 Albyn Place is almost complete and it is expected that these smaller suites will prove very popular with occupiers, with one already under offer prior to completion.
“There is undoubtedly demand for the correct office product, where owners are prepared to invest.”
Dan Smith: How do we tackle dearth of quality offices in Aberdeen?
Ryden is seeing a similar flight to quality outside the city centre.
Its report says: “AIBP (Aberdeen International Business Park) at Dyce is now almost fully let, with the last large suite currently under offer.
“A number of lettings have taken place at Prime Four and again availability there is extremely low as the excess space within various buildings has now largely been soaked up.”
New tenants at Prime Four – in Kingswells – include Harbour Energy, SSE, Odfjell Technology, Cegal and Schlumberger.
Ryden says Westhill continues to prove popular, with most of new-build stock now gone and some buildings currently being refurbished to be ready for the next wave of occupiers.
The report adds: “Rents in all of these locations are starting to rise for the best quality stock and, again with a lack of speculative new development, this is likely to continue.
“Activity to the south of the city remains slow, however, M&G Real Estate is looking to attract occupiers following comprehensive refurbishment at Ecopark (in West Tullos Industrial Estate) to focus on ESG (environment, social and governance) credentials.”
Speculative office projects in Aberdeen ‘currently unrealistic’
According to Ryden, the working “dynamic” at firms in and around Aberdeen has “largely sorted itself out”, with more staff tending to come into offices on a regular basis.
Speculative office development in Aberdeen is “currently unrealistic”, the report says.
It adds: “A number of buildings have, however, been purchased lately, with owners looking at comprehensive refurbishments in an attempt to capitalise on the lack of new grade A stock, coupled with the continued flight to quality that many occupiers are seeking.
“These schemes are likely to prove very popular, and rental levels for this type of stock are expected to increase to bridge the gap between current rents for refurbished offices and new-build Grade A stock.”
Improving industrial market
Ryden says the industrial market in and around Aberdeen “improved yet again in 2023”.
Take up last year totalled 849,952sq ft across 97 deals – the largest volume since the downturn in the oil and gas industry in 2015. The total marked a 10% increase on the five-year average, which is 771,047sq ft.
The industrial market is “particularly strong for good quality industrial units over 10,000sq ft that benefit from secure yards and overhead craneage”, Ryden’s report says.
It adds: “Demand is actually stronger than the positive take-up figures reflect, as the lack of good quality stock is constraining the market.”
“Limited” new development is expected to adversely affect industrial property supply during 2024.
Conversation