A new Aberdeen office market report shows the strongest quarterly take-up in and around the Granite City since 2013.
Property giant Savills says the market gathered pace in the first quarter of 2017, with take-up reaching 181,000sq ft.
It is the best quarterly total since Q3 2013 and not far short of take-up volumes for the whole of 2016, when 183,000sq ft was let.
Key deals in and around Aberdeen this year include Subsea 7’s 108,000sq ft assignation to Total at Arnhall Business Park, Westhill, and Marathon Oil taking 31,668sq ft from Kennedy Wilson at Hill of Rubislaw.
Dan Smith, director in the business space team at Savills in Aberdeen, said: “We believe the worst of the energy market downturn is behind us, and occupier confidence is slowly but surely returning to the market.
“With several active office requirements in excess of 30,000sq ft, 2017 could see office take-up reach 350,000sq ft by the end of the year.”
Savills says that despite total office market availability in the Aberdeen area reaching a record 2.1million sq ft in the first quarter of 2017, there was still a shortage of Grade A space.
The 750,000sq ft of Grade A accommodation available represents about 2.1 years of supply at current take-up rates.
Top rents remain stable at £32 per sq ft in Aberdeen city centre, according to Savills.
But attractive rent free periods for the best space are reducing net effective rents, the firm says.
And the report adds that with much of the 1.3million sq ft of available Grade B and C office space located on business parks, landlords will have to “realistically appraise all available options” until out-of-town requirements pick up.
Sentiment towards Aberdeen’s investment market also picked up in the first quarter of the year after a quiet 2016, when £30million of office assets changed hands, according to the report.
Savills research shows office investment reached £49million between January and March this year, boosted by LCN Capital Partners’ £43million purchase of Lloyd’s Register’s building at Prime Four, Kingswells.
Simpson Buglass, head of the Aberdeen office and director at Savills, said: “Inquiries from overseas investors has picked up and with Aberdeen yields remaining attractive, relative to the rest of UK, the most prime assets will continue to be in demand.”
