Prestigious offices in Aberdeen running out of space

Prime office space across three prestigious office developments in the heart of Aberdeen is fast running out, new figures show.

Two of the buildings – The Capitol and Silver Fin – are both fully let.

The more recent Marischal Square complex on Broad Street is close to being more than 80% filled.

Two-thirds of the total occupational office take-up in Aberdeen during the first quarter of 2022 was for Grade A space – highlighting strong demand despite limited availability.

Rents could start to tick up towards the end of the year and into next.”

The Grade A take-up across the Granite City totalled 129,000, which was about 45% above the five-year average for the quarter.

Marischal Square, comprising 1MSq and 2MSq, is home to Aberdeen Journals, NHS, KPMG, the North Sea Transition Authority, Spaces, RBS, Tenaris, EY, Chevron North Sea and the North East Scotland Pension Fund.

© Supplied by DC Thomson

Deals being worked on for the £107 million development, completed in late 2017, will leave around 34,000sq ft of accommodation still available from a total of 175,000sq ft.

Part of the second level of 1MSq is being split into smaller suites and property agent Savills has reported “good interest levels in these at the moment”.

The Silver Fin building at the west end of Union Street is occupied by Shell, Neo Energy, Kellas Midstream, Prosafe and Barclays.

Meanwhile, The Capitol – next to the Silver Fin – is home to Harbour Energy, PwC, Dentons and Orgega.

About 45,000sq ft will be coming back to the market from Harbour Energy later this year and Savills expects strong interest.

‘Window of opportunity’

Dan Smith, head of office for Savills in Aberdeen, said: “With office lettings picking up in Aberdeen city centre, the evidence suggests a clear flight to quality from occupiers.

“In a post pandemic return to work, employees are demanding more from the offices where they work.

“Businesses are responding to this by providing amenity rich space.

“The very best buildings are nearing full capacity and occupiers with upcoming lease events should consider the window of opportunity that currently exists to acquire good quality offices.”

Mr Smith added: “With no new development, rents could start to tick up towards the end of the year and into next.

“The improving sentiment in the market should also act as a catalyst for landlords to consider retrofitting secondary office stock so it becomes fit-for-purpose for today’s occupier.”

Total Aberdeen office market supply fell by 7% in Q1 2022 to a total of 2.6 million sq ft, with Grade A availability down by 9% at 785,000sqft.

This is the lowest level of total available supply since 2019 but in line with the five-year average for the market.

Savills’ figures suggest the prime rent average for Aberdeen remained stagnant in the first quarter of 2022, at £32.50 per sq ft.

Typical rents have fluctuated since 2016, reaching £27.38 per sq ft in 2017 and hitting a low of £21.64 in 2018, but the market overall grew by 3.2% over the period, Savills said.

In Q1 2022, average Grade A rents rose to £23.50 per sq ft, which Savills said suggested there is cause for optimism and potential for further growth during the coming months.