The past 18 months have been a period of reckoning for how we use our town and city centres. Prolonged lockdown living provided us with a greater sense of appreciation for community and the role town centres play as the beating heart of social, economic, civic and cultural life in our neighbourhoods.
We have seen a huge impact on the places in which we spend our daily lives, which has accelerated pre-existing trends in town centres away from retail dominance and towards greater community input – and nowhere is this truer than in Aberdeen, where a regeneration masterplan is afoot in response to a need for city centre living that draws the community back to the city’s heart.
Repurposing a long-neglected Union Street with residential conversions and strategic investments, Aberdeen City Council is transforming the city centre to a more dynamic, rich and purposeful offer that serves the community and welcomes inward investment.
Proposals to reimagine the former BHS retail unit and Aberdeen Market as a vibrant market hall is one of Scotland’s first retail repurposing projects of scale. The exciting opportunity to create a multi-functional space for food and beverage, leisure, culture, and business has drawn interest from both national and local operators. Elsewhere major investment into Aberdeen Art Gallery, Provost Skene’s House and Union Terrace Gardens will further enhance the desirability of the city centre as a location to live, work and play.
Space to dwell
In its 2015 city centre masterplan, the council identified various strategic intervention areas in the city centre. Post-pandemic, the objectives of these intervention areas are being reconsidered as a result of changing dynamics across the property markets. The availability of assets, such as John Lewis Partnership’s former department store on George Street, could allow the council to take even more proactive involvement in creating positive change in the city centre.
A recent vote against the long-term pedestrianisation of Union Street drew mixed reactions, but as we have seen in London, Birmingham, Bath and Manchester, by removing vehicles from major thoroughfares we create spaces where people dwell for longer periods of time. Aberdeen has a compromised answer that currently allows buses and taxis, but no public road access. It’s not a long-term solution, but this will only be reached by considering trends around future mobility and how we make the city centre truly accessible to all. Accessibility is key if the city is to be fit for modern living.
Overall, Aberdeen and Grampian Chamber of Commerce’s “Investment Tracker” records a pipeline of approximately £12bn of investment due to be realised in the region by 2030. The principal aim of this investment strategy is to maximise economic return from the North Sea continental shelf, while simultaneously seeking to diversify the local economy, reduce reliance of local industry on the oil and gas sector, and to capitalise on the significant and unique opportunities presented to the region by the energy transition.
Projects of note include BioHub, a facility for life sciences start-ups and high-growth enterprises currently under construction at Forresterhill (£40m); Seedpod, a centre of excellence for manufacturing and production in the food and drink industry (£21m); Aberdeen-Inverness rail improvements (£330m); A96 dualling between Aberdeen and Inverness (£3bn), and the new Aberdeen South Harbour (£350m), which is due for completion later this year. Recently completed projects include TECA (£350m) and the Aberdeen Bypass or Western Peripheral Route (circa £1bn).
Aberdeen South Harbour is a major economic focus and will be one of the most modern ports in Europe, providing deep-water access which will render the city capable of competing on a global scale for major offshore infrastructure projects. A regional alliance, (including Port of Aberdeen, Peterhead Port Authority, Aberdeen International Airport, and Aberdeen City and Aberdeenshire Councils) has launched a formal bid for Green Freeport status. If successful, this is expected to help grow gross value added by £7.5bn in the next 10 years, creating up to 30,000 jobs in the north-east of Scotland.
Meanwhile, many of the 17 ScotWind Leasing projects announced in January will be powered by the companies and people based in the Aberdeen region. Activity following the award of the ScotWind licences is part of a projected £170bn-plus investment in capital and operating activities in the UK offshore energy sector between 2021 and 2030.
Fresh appeal
The residential market is attracting growing interest from some key national builders which haven’t been active in the area since 2014. The uptick in both residential transaction numbers and the prices achieved that emerged during the pandemic-fuelled “race for space” is showing signs of continuing. Notable was the high level of interest attracted by Dandara Living’s PRS development at The Point, giving developers further confidence and encouraging more developments to breathe new life into the city centre.
While the energy sector is the mainstay of the local economy, there is a wider economic base which incorporates a service sector including many of the major UK clearing banks, the big four accountancy firms, and leading law practices. The city is also home to Aberdeen University and Robert Gordon University, with more than 30,000 students in education annually. The ongoing diversification of the local economy is creating new jobs that secure the long-term residency of Aberdeen’s community, and is boosting office occupancy and take-up. The city is on track to see the strongest office leasing activity in eight years in 2022, with best-in-class city centre offices nearing full occupancy.
Real estate investor interest is also picking up, with rumours that Union Square shopping centre has recently gone under offer to an overseas buyer. These investors are buying into a market that offers significant value when comparing similar assets elsewhere in the UK, but with the promise of a growth phase ahead.
History tells us Aberdeen does well in economic downturns, with the last market highs seen in 2009-12. But the new approach to regeneration, development and investment, and the projects we are already seeing being delivered, should help diversify the city’s occupier base.
In the long-term this will shift Aberdeen’s fortunes away from being based on economic cycles to having more secure foundations, and drive the reinvestment that will secure its future in the decades to come.
Dan Smith is head of the Aberdeen office at Savills
