Aberdeen office market performance shows signs of recovery according to recent research

The former Chevron House at the Hill of Rubislaw has been purchased by Ithaca Energy

Real estate advisor CBRE has released its latest figures on the office markets in Scottish cities including Aberdeen during the final quarter of 2021.

Office take-up in Aberdeen for Q4 was the strongest for the year, with 91,000 sq ft transacting across 14 deals between October and December. This represents a 77.3% increase from the previous quarter. However, with Covid restrictions ongoing, Aberdeen has admittedly struggled to recover at a quicker pace than Scotland’s other big cities as many businesses continue to hold off making decisions on property strategy until measures are eased and the true impact of hybrid working is assessed. Coincidently, 118,000 sq ft of re-gears concluded within the year illustrating that many businesses are instead choosing to extend leases on the space they currently occupy in these uncertain times. 

The total office space take-up for 2021 was 197,914 sq ft, which is 47% below the five-year average and Aberdeen’s lowest level of occupational take-up since CBRE records began.  However, CBRE alone has in excess of 150,000 sq ft of transactions currently under offer that have slipped into 2022 so a strong start to this year’s take-up figure is expected.

The largest deal of both the quarter and 2021 overall was at the former Chevron House at the Hill of Rubislaw, where Ithaca Energy made the positive commitment to purchase its 96,357 sq ft office headquarters having originally intended to downsize in the building. Other notable deals for 2021 include MRS Training & Rescue taking 18,264 sq ft at Aberdeen Innovation Park, Mental Health Aberdeen taking 11,827 sq ft at Langstane House and HSE/The Met Office concluding on 11,237 sq ft at Aberdeen International Business Park in Q1.

Supply has continued to rise as the year draws to a close. There is currently 2.793m sq ft of available office space within Aberdeen, representing a total vacancy rate of 27.93%. Crucially however, Grade A space remains at a premium as new stock continues to prove popular with occupiers. There is currently only 491,527 sq ft of available Grade A space within the Granite City, representing a vacancy rate of 4.92%. 

Amy Tyler, Associate Director from CBRE in Aberdeen, said: “Whilst deal volumes and the space transacted are down across the year, there are still many reasons to remain optimistic about the office market in Aberdeen. There are signs that the city will soon enter its recovery phase as at present there is 300,000 sq ft in live requirements for office space in the city.”