The office market in Aberdeen was “subdued” in the first six months of the year, said a commercial property expert from estate agents Frank Knight.
A total of 40 deals were concluded in the Granite City in the first half of the year.
But deal activity was concentrated on smaller occupier requirements, with no transactions over 7,000 sq ft.
Overall, 91,000 sq ft of office space was taken up in Aberdeen during the first six months of the year.
Reasons for subdued Aberdeen office market
Eric Shearer, head of office at Knight Frank Aberdeen, said economic conditions were behind the low activity.
He said expected rate cuts by the Bank of England, whose monetary policy committee next meet on August 1, could see more activity in the second half of the year.
He said: “Office activity in Aberdeen has been relatively subdued in the first half of the year, as interest rates were held and the election prompted many occupiers to pause decision-making.
“However, with signs a first rate cut is on the horizon and a clearer political backdrop, we would hope to see take-up rise in the second half of the year.”
Frank Knight itself makes up one of the transactions, having completed a move from Albert Street to Albyn Place.
‘Surprising and worrying’ figures
Mr Shearer said that of the 40 deals concluded in Aberdeen during the first half of 2024, only 14 of the tenants involved were represented by an agent or surveyor.
He said this means Aberdeen occupiers are missing out on potentially significant savings on their property costs.
Mr Shearer said: “Commercial property can be a complicated business.
“Occupiers should take advice on the key elements it comprises of, such as rent, rent-free periods, dilapidations, rent review clauses, and certifications.
If they don’t, they risk leaving money on the table and tying themselves to a more expensive deal than necessary.
“During the first six months of the year in Aberdeen, we had 26 tenants making one of their biggest financial decisions with no professional advice.
“This is likely a reflection of how tough things have been for many businesses recently.
“That said, it’s a false economy – on a 5,000 sq. ft. letting, the fee would be a fraction of the saving you could make through negotiating a typical rent-free period.
“In addition, an agent would likely be better positioned to secure a more competitive rent, as well as provide advice on the finer details of the lease contract.”
Aberdeen six year high for commercial investment
New figures released by Knight Frank earlier this month revealed Aberdeen saw its highest level of commercial property investment for the six months between January and June since 2018.
The independent consultancy’s analysis of industry data found £181 million was invested in commercial property in the Granite City during the first half of 2024.
This is more than double the £78m recorded during the same period in 2023 and well above the £99m average of the past five years.