Office take-up in Aberdeen hit a record high in 2011, while prime rents were the highest out of 11 cities surveyed outside of the South East.
According to the latest research from Knight Frank, the buoyancy in the North Sea oil and gas sectors is having a significant effect on the local market.
KF’s annual Aberdeen Office report said that office take-up last year was among the highest in the UK at 773,175 sq ft, doubling the city’s figures for 2010, and surpassing Manchester, Liverpool, Edinburgh and Glasgow.
The report also showed that, during 2011, Aberdeen commanded the highest prime office rent out of the UK’s 11 key regional markets outside the South East. A new record headline rent of £31.50 per sq ft was set following law firm McGrigors’ lease of Queens House.
Katherine Monro, partner at KF’s Aberdeen office, said: “This record performance in Aberdeen is inextricably linked with the current climate in the oil and gas industry. High oil prices have prompted investment and business expansion, and are consequently fuelling office demand. In addition, the news of £10bn investment in the Clair Ridge oil fields to the west of Shetland has boosted long-term commercial property prospects for the region.”
Almost 75% of 2011 take-up occurred during the first six months of the year, with several large deals exceeding 50,000 sq ft, including Wood Group and Centrica’s 66,584sq ft and 58,339 sq ft leases respectively at iQ on Justice Mill Lane and AMEC’s sublease of 94,000 sq ft from Shell UK at Seafield House, Hill of Rubislaw.
Monro believes 2012 will see occupier market conditions remaining strong due to a number of outstanding major enquiries from the energy sector. She believes that prime headline rents will achieve another record high, reflecting the shortage of grade A space in Aberdeen city centre.
lisa.pilkington@estatesgazette.com
