I met an energy sector client yesterday morning and the discussion we had over coffee was a good account of what has happened in the Aberdeen commercial property market this past year.
My client is located at Marischal Square, so we met in a local coffee shop near his office.
As an eternal Aberdeen optimist, I have to admit it was somewhat deflating to count in excess of 40 vacant retail units on Union Street on the walk down.
But this is definitely not just an Aberdeen issue – as I wandered down the street I spoke to a London-based colleague who told me that on the capital’s retail “mecca” of Oxford Street there are currently more vacant units than we have on Union Street.
Rents are the most affordable they have been in my 20 years in the property market.”
People bemoan that high rents and rates put occupiers off taking space.
For me, the real issue is that to open a high-quality operation you need to invest in a fit-out.
With the increasing drive towards shopping online, for many it is too big a gamble to invest that initial significant capital sum.
If any occupier is prepared to take that gamble, I would recommend speaking to the agents marketing those vacant Union Street units now.
Rents are the most affordable they have been in my 20 years in the property market.
The local council has to be given credit for making bold decisions in this past year, all aimed at improving the city centre.
Firstly, acquiring the eyesore that is the former BHS and indoor market, which had been vacant for five years.
Then, successfully securing £20 million Levelling Up funding to create a new market for Aberdeen.
This will not only provide incubator space for local retail and food operators but also finally deliver a credible link for people to get from the train station and Union Square up to Union Street.
‘A more pleasurable, calmer retail and leisure experience’
We next had the extremely positive recent news that Union Street is going to become more pedestrian-friendly.
The Market Street to Broad Street section is to be pedestrianised, with the rest of Union Street benefiting from pavement extensions and new “plaza” areas in front of some of our stand-out city centre buildings.
This will help to create a more pleasurable, calmer retail and leisure experience in the city centre, bringing Union Street into line with other popular European retail destinations.
Convincing Aberdeen Football Club to remain at the beach is also a massive result in helping with future vibrancy and a buzz in the city centre on matchdays.
My client and I were both sad to see John Lewis close in Aberdeen, but he went on to tell me the excellent customer service he had received buying a TV from locally-owned Booth Scotland in Inverurie.
I shared a similar positive experience buying a pair of jeans from local retailer Attic Clothing in The Academy Centre, Aberdeen.
We both agreed the west end of Union Street will enjoy a huge benefit when around 1,000 energy workers move into the last remaining space in The Silver Fin building, boosting trade in shops, gyms, restaurants and coffee shops in the surrounding area.
On the residential side, there are still numerous challenges associated with converting the empty buildings we found ourselves looking at as we finished our coffees.
‘Steady stream of new flats’
But it is good to report that, as a consequence of the moratorium on affordable housing in the city centre, we are now starting to see developers take interest in these problem properties.
We will see a steady stream of new flats coming through in the not-too-distant future.
This year has been a challenge for us all, however, I would like to think Aberdeen will, ultimately, benefit from bold decisions made during 2021.
Derren McRae is head of office for property giant CBRE in Aberdeen.
