Property adviser CBRE has revealed Aberdeen saw uptake in offices increase by 115%, its highest since the first quarter of 2012.
It said the first quarter of 2022 saw take-up reaching 195,905 sq ft, a 115% increase from the previous quarter and the highest since 2012.
CBRE advised on 169,460 sq ft of the space transacted, equating to 86% of all deals in the quarter.
The largest deal of the quarter in both Aberdeen and in Scotland was energy giant Shell committing to 100,312 sq ft at The Silver Fin Building, resulting in full occupation of the Grade A city centre office property.
Other prominent deals across the quarter include the recently rebranded North Sea Transition Authority (formerly Oil & Gas Authority) acquiring 18,000 sq ft in Marischal Square, PBS and RelyOn Nutec taking 17,911 sq ft and 7,933 sq ft respectively in Westhill, DNV leasing 10,948 sq ft in Aberdeen International Business Park, Dyce and Waldorf Production purchasing 6,803 sq ft 70 Queens Road.
Office supply from last quarter reduced by 5% and currently sits at 2.67m sq ft, with only 428,000 sq ft of Grade A space available.
While office take-up in Edinburgh totalled 118,926 sq ft in the first quarter of 2022.It was up 33% from the first quarter of 2021 and only marginally below the pre-pandemic levels of quarter one of 2020.
A similar trend continues in 2022 as occupiers remain focused on quality space, reflected in the number of Grade A office transactions.
Grade A take-up reached 67,161 sq ft, representing 56% of the quarter one total. Notable deals included another two lettings at The Haymarket development, where Shoosmiths and Dentons have taken space totalling 31,345 sq ft.
There was an influx of deals in quarter one, with 31 transactions for new business space within the city, up 15% on the first quarter last year.
The highest level of activity was recorded in the sub 5,000 sq ft market with 29 deals. It was also a strong quarter for the 10,000 sq ft plus bracket of the market with four deals totalling 57,501 sq ft.
These included the deals at Haymarket as well as TrustPilot, the Danish consumer review company, letting 10,515 sq ft at 10 George Street and Roslin Cells agreeing to let circa 15,000 sq ft at Edinburgh Technopole.
It noted that there is continual pressure on prime rents in Edinburgh as the supply of Grade A space continues to decrease in the city centre.
Prime rents now sit at £38.50 per sq ft, but with the tightening of supply and limited development pipeline in the near future, it is expected to reach £40 per sq ft soon.
Supply once again crept up in the last quarter, with 1.97m sq ft of office space now available within the city. The longer-term supply average sitting at 1.99m sq ft, Edinburgh still finds itself below this figure despite the impact of the pandemic.
It reported that take-up for the Glasgow office market totalled 95,496 sq ft in the first quarter of the year, which is up 28% from the first quarter of 2021.
A total of 38 lettings took place across the quarter, which is already 30% of the total number of transactions throughout 2021.
Glasgow’s twelve-month rolling average has increased, with 623,888 sq ft transacting in the past year.
The largest of the quarter one deals was Burness Paull’s 14,814 sq ft letting at the recently completed 2 Atlantic Square, at which BDO also took 8,078 sq ft, with CBRE involved in both deals.
A further 10,200 sq ft was transacted at Tay House with civil engineers Fairhurst taking space within the building on a ten-year lease.
180 West George Street was also involved in a couple of deals – with Frazer Nash and LMR Partners responsible for some 13,454 sq ft exchanging over two floors.
Office space supply continues to rise gradually within the city, with availability now sitting at 2.684m sq ft – the highest it has been since 2015.
However, Grade A office supply remains at a “critical shortage” with just 168,000 sq ft available, reflecting a vacancy rate of 0.74%.
It reported that with a lack of new developments within the pipeline, it is expected the current prime rent of £35.25 per sq ft will continue to rise.
It notes it is partly to do with the construction cost price inflation and occupiers turning to pre-letting.
Andy Cunningham, head of CBRE’s Scottish advisory and transactions business, commented: “We’ve witnessed an encouraging start to the year in all three cities with the same recurring themes that were prevalent in 2021 – a flight to quality space and strong environmental credentials. It is pleasing to see Aberdeen having a particularly strong first quarter of take up, largely due to the team’s recent letting for Shell’s new HQ at The Silver Fin Building.
“Going forward we suspect there will be fewer lease re-gears than in the past as the desire to have a more modern building will be stronger, and with so little supply, larger occupiers will have to commit earlier than ever to secure the best space meaning we’re likely to see an increase in pre-letting activity.”
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