Higher oil prices and greater interest in renewable energy helped the take-up of industrial property in Aberdeen rise to its highest level in almost a decade, Knight Frank says.
The group's analysis found the Granite City saw 926,140 sq ft of take-up across 95 deals during 2022 - up 42% on 2021. That was the highest figure since 2014’s 1.33 million sq ft and well above the 10-year average of 723,819 sq ft.
The largest letting of the year was in Portlethen, where a waste company took 67,000 sq ft of industrial space.
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There were five lettings over 20,000 sq ft during the year, as well as "heightened lease renewal and re-gear activity".
Last month Knight Frank reported that office take-up had increased 95% between 2021 and 2022, with energy companies accounting for some three-quarters of activity.
Scott Hogan, head of Scotland industrial and logistics at Knight Frank, said: “Last year’s take-up figures show demand for industrial property surged in Aberdeen during 2022 – albeit, this was boosted by a number of larger deals. Part of the rise in demand can be attributed to improving sentiment from within the energy sector and a sustained high oil price.
“There is still plenty of demand for industrial accommodation in the city, but the lack of good quality available space means that there is a high level of competition for the right property – especially at the larger end of the market. This was somewhat reflected in the higher than average number of lease renewals taking place.
“These dynamics also helped push up the average lease length last year and prime rents continue to hold up. However, continued high build costs mean market conditions are still not right for speculative development.
“All things being equal, there are a healthy number of deals in the pipeline, along with strong enquiry levels, which should sustain the market into 2023. Growing interest from renewable energy companies will also add to the bedrock of the oil and gas sector as the staple of property deals in Aberdeen.”
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