Encouraging end to 2020 for Aberdeen office market

Latest research by global real estate adviser CBRE has revealed a positive end to 2020 for the Aberdeen office market, with a take-up of 155,926 sq ft for the final quarter. Whilst this is down 34% on the same period in 2019, it is 26% up on the five-year average of 123,307 sq ft for Q4.

The total take-up of office space in Aberdeen in 2020 was 424,797 sq ft. Although this is again down from 2019’s total of 505,710 sq ft, it is 11.3% above the five-year average and represents Aberdeen’s second-best year for office occupational take-up since the 2014 oil price drop. In addition, a further 186,000 sq ft of office buildings in Aberdeen were sold to developers for redevelopment or property investors for refurbishment and re-letting.

Like all markets, Covid had an impact on both the volume and size of deals in 2020. Only 53 deals completed throughout the year, compared with 84 deals in 2019. However, with eight deals topping the 10,000 sq ft marker, the city clearly still remains an attractive place of business for larger occupiers.

Undoubtedly the largest deal of the year was at Aberdeen International Business Park in Dyce, with BP committing to a 102,000 sq ft new North Sea Headquarters, a transaction in which CBRE advised the occupier. Other highlights included Stork’s 55,000 sq ft acquisition of The Quad in Dyce, Equinor acquiring an additional 15,000 sq ft at Prime Four, Kingswells and C7 Health purchasing a 19,200 sq ft office at Wellheads Crescent, Dyce.

Overall office supply sits at 2.6m ft, an increase of 7.61% against the year-on-year figure. New Grade A space in Aberdeen remains at a premium however, with 259,524 sq ft currently available to the market.

Derren McRae, Head of Office at CBRE Aberdeen, said: “Whilst we’ve endured a challenging year, the city’s healthy final office take-up figure paints an encouraging sign. A city that is all too familiar with economic disruption, it’s perhaps Aberdeen’s famous resolve and resilience that explains how we’ve managed to successfully navigate both a global pandemic and oil price fluctuations, delivering some positive end of year figures in the process.

“Despite market challenges it is encouraging to see that there are some fairly significant office requirements being circulated. It will certainly be interesting to see how office requirements evolve as companies look to incorporate more flexibility for the working location of staff into their real estate strategy, with many likely to favour a blended approach to enable a mix of office and home working.”