Office take-up in Aberdeen is running at twice the pace of last year, a new study has found.
According to Knight Frank, the Granite City office market is on track to surpass its 2021 take-up total in just six months.
Confidence has picked up as a result of spiralling oil prices, the commercial property giant said.
The first quarter of 2022 has already seen deal completions equivalent to half of the office space transacted over the whole of last year, it added.
There is definitely a sense that conditions are improving.”
Matt Park, partner, Knight Frank.
Take-up has been buoyed by energy company Royal Dutch Shell following through with its decision to move its Aberdeen base into the Silver Fin Building on Union Street.
Knight Frank’s projections, based on active requirements and deals already under way, suggest more than 200,000sq ft of office space should conclude by the end of June.
This is 6,000sq ft more than the 194,000sq ft transacted last year.
‘Cautious optimism’
Knight Frank said there were signs of cautious optimism among occupiers, as workers return to the office and with oil prices likely to stay near recent highs.
The price of a barrel of crude has soared to levels not seen since 2014 since the start of the Ukraine crisis.
Energy and service companies make up the majority of demand for office space in Aberdeen, along with the professional services that support them.
There is more activity in the market and requirements from occupiers are slightly larger in size.”
Matt Park, partner in Knight Frank’s Aberdeen office, said: “We saw a strong finish to last year and into the start of 2022.
“Combining that with the deals we believe are close to conclusion or will be finalised by the summer, Aberdeen is on track to exceed last year’s total take-up in just six months.
“There is definitely a sense that conditions are improving.
“There is more activity in the market and requirements from occupiers are slightly larger in size.”
Mr Park added: “The Royal Dutch Shell move has been a big boost for the city centre and we would expect to see more companies assess their options as their workers return to the office.
“That said, while we believe this year will see a return of some positive momentum, 2023 is likely to see the recovery truly begin if the oil price can be sustained at current levels.
“We have not had an over-supply of space the way we currently do in previous cycles.
“But this could help drive activity as more occupiers get back to their offices and decide to explore the opportunities available to them, including re-purposed older buildings, over the course of the next 12 months.”
New west end letting
Meanwhile, Aberdeen firm Knight Property Group (KPG) has announced the letting of Balmoral House in the west end of Aberdeen to children’s charity Charlie House.
The charity has agreed a three-year lease of the building on Carden Place.
Extending to 3,875sq ft over four floors, the property is expected to provide an ideal base for a wide range of support services.
It will also be home to more than 50 staff and volunteers.
KPG founder and chairman James Barrack said: “We are very proud to have such a worthwhile charity as a tenant and also to be able to support the vital services it provides through the Barrack Charitable Trust.”
Last November the KPG-funded trust awarded £5,000 to the Charlie House Big Build Appeal.
The cash is going towards the initial interior design costs for a new specialist support centre for the charity on a four-acre site in the grounds of Woodend Hospital, Aberdeen.
