Commercial property experts fear a North Sea oil and gas slowdown caused by the windfall tax could put an Aberdeen office market recovery into reverse.
New figures from Knight Frank show office take-up in the Granite City nearly doubled to 385,583 sq ft last year, up by 96% compared with 2021.
Demand was buoyed by higher oil prices, as well as the market returning to some kind of normality after the disruption created by Covid-19 during the previous two years.
A strong final flourish to 2022 saw 81,231 sq ft transacted in the final quarter.
The whole year total was also boosted by energy giant Shell taking more than 100,000 sq ft at the Silver Fin Building, on Union Street, during the first quarter.
Knight Frank said around 281,000 sq ft, or 73%, of the total deal volume last year involved energy and supply chain companies.
Much of the remaining space was taken by professional services companies advising the city’s energy firms.
These included law firm Gilson Gray, whose move to muscle in on Aberdeen’s legal scene is supported by 4,500 sq ft of office space at Blenheim Gate.
The Press and Journal understands that an announcement about another major office deal is imminent.
It will see a well-known law firm relocate its Aberdeen team into Marischal Square.
With several deals carrying over into 2023, Knight Frank said there was cautious optimism in the city in the first quarter of the new year.
But there was also a warning about repercussions of the windfall tax.
The UK Government is taxing the offshore industry more to help pay for a string of measures to ease the burden of soaring energy bills for consumers and businesses.
A number of operators have recently been reviewing their spending plans for 2023, while one –Harbour Energy, the North Sea’s largest operator – is also cutting jobs.
Matthew Park, partner at Knight Frank in Aberdeen, said: “Last year was much more positive for the city’s commercial property market, following two years of pandemic-related disruption.
“We expected (office) take-up to reach 400,000 sq ft but some of the deals have taken slightly longer to get over the line.
These outstanding transactions should conclude during the first quarter of 2023, Mr Park said. He added: “With the UK Government offering the potential of more than 100 new awards in the latest North Sea licensing round, there are reasons to be cautiously optimistic for the year ahead.
“We are hopeful that provided the oil price stays high – above $80 per barrel – there will be continued demand for high quality office space across the market.
“However, the windfall tax and the SNP-Greens’ recent announcement on their intention to wind down North Sea oil and gas activity are becoming factors in many energy companies’ investment plans for the years ahead.
“In turn, they could begin to have an impact on the city’s property market.”
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