Scotland’s major office markets are well into their second year of recovery, property giant CBRE said yesterday.
But while the firm’s latest analysis shows Edinburgh had a strong start to the year for take-up, demand in Aberdeen and Glasgow was “modest”.
A weak second quarter for the Granite City led to below average take-up over the first six months of 2014, CBRE said.
The first half total of 212,233 square feet was down by 50% on the previous six months and by 25% year-on-year, the firm added.
A total absence of deals for office space of more than 10,000sq ft in the second quarter was “quite unusual” for Aberdeen, it said, adding the city had a long term average of four per quarter.
CBRE said there were five deals in this category in the first quarter of the year, with the largest being Wood Group taking 58,490sq ft at Nexen House in March.
Office availability in the city currently stands at 425,876sq ft, with the majority being Grade B and C stock, the firm said.
It added: “There is just under 69,000sq ft of available grade A supply, with the largest ready-to-occupy floor space being just 17,925sq ft at Union Plaza.
“Speculative development is starting to commence, however, with Dandara’s The Point (80,000sq ft) and Knight Property Group’s The Capitol (74,000sq ft), both city centre schemes, now on site and due to complete in 2015.”
CBRE said average prime rents in Aberdeen had risen to £32 per sq ft after a three year spell at £31.50.
This growth should continue as stock is increasingly squeezed, with £33 likely to be reached by the end of this year, the firm added.
CBRE said investment market momentum seen in Aberdeen during 2013 carried through to the first quarter of 2014, but had tailed off as the independence referendum drew closer.
It added: “Many funds are currently opting to play safe and holding back on investment until the outcome of the vote is clear.
“Total volumes transacted reached £108million across six deals so far this year.”
Derren McRae, managing director of CBRE’s Aberdeen office, said: “Whilst the level of take-up in H1 2014 has been somewhat lower than recent years, there is a significant amount of pre-let office deals under offer which are anticipated to convert in the second half of the year.”
CBRE said total Scottish office market take-up in the first half of 2014 was 960,200sq ft, up from 791,800sq ft a year earlier.