Aberdeen International Business Park
The recovery of the energy sector in 2019 market boosted occupational take up to over 530,000 sq ft, the highest level since the oil crash in 2014. Oil price was at $64/bbl at the start of 2020 and we witnessed a strong start to 2020 due to renewed occupier confidence. Take up in Q1 was 170,000 sq ft, well ahead of the five year quarterly take up average of around 95,000 sq ft, however, when the pandemic struck and the first lockdown come into force, take up fell dramatically and oil prices plummeted to under $15/bbl before rebounding back to average $43/bbl for the year.
2020 OFFICE MARKET OVERVIEW
The total take-up of office space in Aberdeen in 2020 was 457,661 sq. ft. Although 14% down from 2019’s total, it represents Aberdeen’s second-best year for office occupational take-up since the 2014 oil price crash.
The Covid-19 imposed restrictions clearly had an impact on both the volume and size of deals throughout 2020, with some companies taking the opportunity to conduct a strategic review of their occupational requirements. Only 54 deals completed throughout the year, compared with 84 deals in 2019. However, eight deals over 10,000 sq ft and 155,926 sq ft of transactions in Q4, would indicate that Aberdeen out performed many other regional cities and remains an attractive location for businesses.
Grade ‘A’ Supply & Take up
(Beige indicates KF involvement)
Capsule Suite at Union Plaza
Unsurprisingly, Energy & Utilities have been the most active sector in 2020 accounting for 47% of take up. Construction and Engineering accounted for 20% of deals done with professional services in third place with approximately 7%.
Two emerging sectors in Aberdeen are Tech and Life Sciences with a market share of 5% and 6% respectively.
The development pipeline mainly consists of proposed schemes only. None of these are likely to begin works unless a pre-let is secured or a sustained market recovery is recognised. The only exception to this is the two new speculative offices in Westhill developed by Knight Property Group, totalling 21,100 sq ft.
Moving into 2021, the roll out of vaccines have created greater optimism and allowed business strategy to focus beyond the crisis. The much-debated shift away from offices is now widely dispelled, contrasting the viewpoint that the “office was dead” early in pandemic, although a blended approach to enable a mix of office and home working is likely to be adopted by many companies.
There will be greater importance placed on securing the best quality space as well as amenities that supports the well-being of staff, meaning competitive pressure on prime office stock availability in 2021.