What’s next for the Aberdeen commercial property market?
Fifteen months ago the market witnessed a “black swan effect”.
The hangover from the 2015 oil and gas downturn, together with Covid-19 and associated restrictions was a recipe for disaster.
Prior to Covid, there were positive signs in the city’s office and industrial markets, with fresh inquiries and requirements on the increase on the back of sustained higher oil prices and an improving market through the cycle.
The pandemic sadly put the brakes on the office market as businesses and occupiers were forced to work from home and, as a result, have had the opportunity to review their working practices.
Working from home certainly has its lifestyle benefits, but as time has gone on many people are now keen to get back into an office environment.
It’s clear the majority of businesses will return to an office environment, however, there will likely be a blended approach in terms of occupational needs depending on the type of business and its operation.
I firmly believe there will be an increase in demand for office space once occupiers re-populate their offices and understand how their businesses may function in the future.
Whilst there will undoubtedly be downsizing, there will likely also be upsizing for those businesses which require all of their employees to be in the office.
There has never been a more important time for public and private sectors to collaborate and work together to seize these opportunities for the better of Aberdeen.”
The majority of companies have already undertaken various surveys to ascertain employees’ thoughts on return.
A number of companies have already taken a firm stance and outlined their intention (dates permitting) of a phased return, with near to full occupancy, towards Q3 of this year.
There are interesting times ahead, but as long as there is movement in the market this will add to transactional activity and current supply levels will, hopefully, start to be eroded.
The industrial market has fared better during the pandemic, mainly due to the ongoing and “essential” nature of business – these firms are ahead of the game when it comes to operational needs.
‘Decent’ industrial stock hard to come by
Although on the face of it current supply statistics may look concerning, the availability of decent stock is few and far between.
The local retail market is encountering issues beyond Covid and there are a number of other variables which are contributing to the loss of high street retailers.
Covid has accelerated online retail and the majority of retailers have suffered as a consequence.
The larger “anchor” tenants’ are all assessing their business models and – in some cases – being forced into unit closures and company voluntary arrangements.
This does not bode well for the future of high street retail and in Aberdeen a number of retailers are weighing up if it’s viable to operate stores.
The local retail market is encountering issues beyond Covid.”
We all understand the importance of larger retailers and what they bring to the city and the fact they attract visitors.
There are currently a number of inquiries filtering through at the sub-3,000sq ft market as new businesses look to take a stance at a local level.
Despite the challenges we are facing, opportunities have been created and we all need to embrace change and move forward.
There has never been a more important time for public and private sectors to collaborate and work together to seize these opportunities for the better of Aberdeen.
After all, we all want Aberdeen to prosper and be successful which, in the long run, will benefit everyone.
Graeme Nisbet is director and head of agency at commercial property firm FG Burnett
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