Derren McRae, Managing Director of CBRE Aberdeen, provides an update on the Aberdeen Commercial Property Market:
Every week at CBRE in Aberdeen we religiously have our 9am MMM (Monday Morning Meeting) where we collectively review our diaries from the previous week and let the team know our plans for the week ahead. On Monday 23rd March we all ‘Zoom’ed’ in to our first virtual MMM of the lockdown and it is incredible to think that this Monday we had our 15th MMM from the comfort of our own living room, dining room or spare bedroom.
We are happy to share an update on various sectors of the Aberdeen commercial property market across our service lines discussed at this week’s meeting.
There are actually some substantial requirements out in the office market at present. For example, four occupiers are giving proper consideration to their Aberdeen office HQs of the future, representing approximately 320,000 sq ft of live requirements alone. In addition, we are pleased to report deals have concluded during lockdown, however in some cases, despite the proposed office move resulting in cost savings for a business, there may be a reluctance to announce a transaction due to ongoing company re-organisation, a trend we also witnessed in 2014/2015.
We have had a steady stream of requirements in last the last couple of months, with the clear focus on the best quality refurbished or new space. Positively there will soon be announcements of new lettings from major logistics occupiers and given the increase in the number of delivery vans appearing on Aberdeen streets we expect activity in this sector to continue.
Retail & Leisure
There is no doubt a challenge in this sector across the UK, however we see this as a real opportunity to make long lasting improvements to Aberdeen city centre’s urban fabric which post COVID-19 will result in a visit to Union Street and surrounding areas being a far more enjoyable experience for residents and visitors.
The majority of larger investment transactions in Aberdeen in recent years have been by overseas investors. The reality is that investors want to see, feel and touch a building. Whilst rules are changing all the time, marketing of properties is unlikely to happen until restrictions on travel are reduced. Furthermore the investment market is under-pinned by a fluid debt market, however currently the availability of that debt is limited.
There is no doubt workplace design will have to change to meet new safety guidelines but also to adapt to a new way of working following the shift to home and flexible working patterns. The focus has therefore been at looking at ways for employers to offer a balance of working environments with the office becoming more of a hub for collaboration, training and access to resources.
The team has secured £1million + of savings in business rates for clients in the North East since the beginning of lockdown and continue to focus on minimising rates liabilities for our client base. With the best interest of our clients in mind, we continue to challenge rateable values and Government policy, and have, to date, lodged in excess of 5,000 COVID-19 Material Change Circumstances appeals on behalf of our clients in Scotland.
The lockdown has been a busy time for our Property Management team. Their time was initially spent ensuring that the properties under their management were safe and secure in line with the emergency legislation put in place by the UK and Scottish Governments to protect the population from the pandemic. In recent weeks, their focus has changed to providing advice to our clients and occupiers on the re-occupation of their properties in readiness for the go ahead from the Scottish Government to lift the current restrictions.
Their other priority has been collecting rent and service charge monies for the May quarter. This has been a challenging time but with collection statistics of close to 70% on rent and 60% on service charges three weeks after the quarter day it is better than expected.
Global Workplace Solutions
Our team in Aberdeen is busy working with a range of occupier clients as they look to gradually facilitate a safe return to the workplace for employees.
Whilst many in our team are keen to return to a safe workplace when we are actually permitted to do so, the MMMs in the second half of the year will be a blend of socially distanced interaction mixed with an element of virtual input from the remaining members of the team as we embrace and adopt new ways of working.