A market activity report forecasts that despite difficult conditions in Aberdeen in 2016, the office market is set to improve in 2017.
In the annual research report, property firm Knight Frank, anticipates that as the energy sector begins to recover from the downturn, the office market will see increased activity as occupiers plan for the future.
It reveals that in 2016, property take-up was 60% lower than the region’s 10 year average, reflective of the city’s economic climate. In January last year, Brent crude oil was trading at a low of US $29.00, compared to the high prices of $100 seen in 2014.
Economic uncertainties in the oil and gas sector, as well as Brexit and indyref2 looking more likely, meant that investment transactions were at their lowest since 2009.
Key office transactions in 2016 included the letting of 36,254 sq ft Trafalgar House One on Harness Road, the letting of 31,328 sq ft at Marathon House, Hill of Rubislaw and the pre-let of 26,000 sq ft at The Silver Fin on Union Street.
The pre-auction sale of properties on Albyn Terrace in December however, showed promising signs for the market, illustrating that buyers can be found, providing the price is right.
Supply levels are set to continue to increase in 2017, with the completion of new builds such as Muse and Aviva’s 170,000 sq ft Marischal Square and Titan and BA Pension Fund’s 132,000 sq ft Silver Fin respectively.
Knight Frank Aberdeen partner Eric Shearer said: “The good news for Aberdeen’s economy is that this year we have already seen a more fluid transactional market as buyers’ and sellers’ expectations converge.
“We’ve seen a significant increase in transactions reflecting positive sentiment in the energy sector, including TOTAL’s relocation from Altens to a 138,535 sq ft office HQ in Westhill; The Care Inspectorate committing to city centre space within AB1 and Maclay Murray and Spens moving to The Capitol.
“We believe the worst has passed and 2017 will be a stronger year for Aberdeen’s office sector. There is now a more positive sentiment towards the market which we hope will continue.”