Aberdeen, Edinburgh and Glasgow Offices

A recent report from Savills on the Scottish office market, saw lettings reach 1.4m sq ft for the first half of 2017, 20% above the five year half year average.

Savills say that the Aberdeen office market has seen increased letting activity in recent months driven by the increased oil price. Take up during the first half of 2017 reached 238,000 sq ft, exceeding the 2016 full year level. 78% of take up was accounted for by the engineering, oil and utilities sector, up from 17% last year.  Nonetheless there remains ample supply of office space in the Aberdeen market, which has fallen just 3% from end 2016 to stand at 2 million sq ft. Office schemes at the Silver Fin building and Marischal Square are both expected to complete during the second half of 2017, providing 287,000 sq ft of additional speculative offices.

Edinburgh saw the strongest quarter of take up on record during the second quarter of 2017, according to Savills, pushing the half year total to 772,000 sq ft, which was 50% above the five year first half average.
Total city centre take up at half year reached 541,000 sq ft. This was largely driven by the GPU (Government Property Unit) signing a pre-let on 180,000 sq ft of space at New Waverley. Other large scale deals included Computershare signing a pre-let for 41,000 sq ft of space to be refurbished in Four North and Burness Paull regearing on 27,000 sq ft at 50 Lothian Road. Other deals in the out of town market included Standard Life signing for 31,000 sq ft at South Gyle Broadway. Grade A available office space remains scarce in Edinburgh, with only 313,000 sq ft of space remaining,

Glasgow saw office lettings reach 434,000 sq ft across the city centre and out of town markets during the first half of 2017, in line with the five year first half average. The largest deal was the Student Loans Company’s 41,000 sq ft letting of Europa House. Despite modest take up figures for the city centre market, the out of town market saw a number of engineering companies take space, which has accounted for 25% of the wider market take up this year.With a number of large deals under offer in the city centre, such as DWP, take up in Glasgow looks set to reach Savills forecast of 600,000 sq ft for the full year.

Metropolis has published 60 business leads on Aberdeen, Edinburgh and Glasgow occupiers with requirements, looking for office space over the last six months. It is also reporting on nearly 100 office tenants that are ‘potential movers’ as they approach decisions on whether to renew leases or relocate in 2018 and 2019.

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Scotland enjoys growth

CBRE’s H1 2015 report on Scottish office market trends concludes that take-up is above average in Edinburgh, Glasgow and Aberdeen.

In Glasgow, CBRE point to active requirements in excess of 800,000 sq ft, with local agents calculating that demand remains at an all-time high, despite a slightly subdued first half of 2015, with just under 225,000 sq ft of office deals, about 75% of the long term half year average.

The latest large transaction was the 27,522 sq ft let to Teleperformance at Cuprum, along with 10,000 sq ft let to Arup at 1 West Regent Street.

Interest in new schemes at 1 West Regent Street (where Metropolis has reported on the activities of Real Radio) and 110 Queen Street (where there is activity by Deloitte, amongst other) is growing, while St. Vincent Plaza, following its completion, is expected to follow suit with a number of interested potential occupiers. Metropolis is monitoring demand from companies such as Kier, AXA and Jacobs.

In Edinburgh, nearly 404,000 sq ft was transacted in the first half of 2015, which CBRE point out is just above the recent five year H1 average. Capita took the entire building (26,900 sq ft) at 145 Morrison Street and the Law Society of Scotland signed for 19,100 sq ft at Atria One.

Demand remains strong in Edinburgh, with requirements from companies such as KPMG, Amazon, Edinburgh University and Brodies. Metropolis is speaking to over 50 Edinburgh companies about current move plans.

Moorfield is speculatively developing Quartermile 4 and has secured a pre-let to FanDuel. FanDuel concluded the deal six weeks after agreeing terms.

The next large office scheme completion in Edinburgh is The Haymarket due for late 2017.

In Aberdeen, three large pre-let deals were struck during the first half of 2015: Anderson Anderson & Brown and LR Senergy committed to 45,000 sq ft and 100,000 sq ft respectively at Prime Four Business Park while KCA Deutag acquired 70,000 sq ft at City South. Take up in the first half of 2015 was 290,000 sq ft, which was a fall from the 800,000 in the second half of 2014.

Agents report that he majority of letting activity and requirements are in the sub 10,000 sq ft size bracket. Metropolis is tracking demand from companies such as Raggnar Power and Burnett & Reid.

Aberdeen tipped for growth

A recent survey by the Bank of Scotland has predicted that 39,000 new jobs are expected to be created in the UK oil and gas industry in the next two years,.

The survey predicted that the “largest share” of the extra positions would be based in Scotland.

The survey of 100 companies is the bank’s third annual report on the oil and gas sector, with UK firms questioned about their future prospects for 2014 and 2015.

The survey also commented: “With most of the UK’s oil and gas firms clustered in Aberdeen and the north-east, Scotland should reap the largest share of these new jobs, however other parts of the UK will also benefit from expansion plans.”

Metropolis is currently tracking over 20 firms looking for office space in Aberdeen, including a number approaching lease expiries in 2014 and 2015. Examples include Amec and Premier Oil. Aberdeen has an office vacancy rate of only 3.5% making some searches protracted.

The largest mover of 2013 was EnQuest’s pre-purchase of ‘The Grande’ from Drum Property for a new HQ building of 120,000 sq ft. There are five large speculative office schemes in the pipeline.