One of the flagship new office developments in Aberdeen city centre is more than 85% let, defying fears that finding tenants in a local economic downturn would be a major challenge.
There is only one floor left unaccounted for among nine levels of office accommodation in the 12-storey building, The Capitol, at the west end of Union Street.
A joint venture between Aberdeen-based Knight Property Group and M&G Real Estate, The Capitol opened just over a year ago after a £30million transformation of the former theatre, cinema and nightclub.
Its joint letting agents are Savills, Ryden and AB Robb.
Arron Finnie, partner and office market expert in the Granite City office of Ryden, said it was a remarkable feat to reach 85% so soon.
He added: “Considering what we’ve been going through in Aberdeen, to be sitting with only one floor of the whole building left has left everyone pleasantly surprised.”
The Capitol’s success is also good for the soon-to-be-completed Silver Fin building next door, he said, adding that with the two properties no longer in so much direct competition for business, the newer one had a clearer run.
Mr Finnie was speaking as some of Ryden’s Aberdeen team discussed the firm’s 80th Scottish property review.
Ryden said more stable oil prices and cost-cutting were boosting confidence in the North Sea industry, with signs of improvement now “filtering slowly” through to the north-east property market.
Office supply in around Europe’s energy capital has risen by 7% to nearly 2.9million sq ft during the past six months, with 305,000sq ft still under construction, the report said.
Grade A stock – such as at The Capital, Silver Fin and the new Marischal Square development in Broad Street – accounts for about two-fifths of total supply.
Take up for the past six months is up by 92% to 235,000sq ft across 31 deals, underpinned by major lettings at Hill of Rubislaw and Westhill.
Industrial market expert Paul Richardson said companies’ downsizing and consolidating in the downturn had created “a lot of surplus space”, creating opportunities for firms that were previously priced out of an overheated market.
“The industrial stock has doubled over the past 12 months,” Mr Richardson added.
Ryden partner Ken Shaw said Aberdeen remained a challenging market for property investment, but deals were being done.
Recent transactions include the sale of an office building at Prime Four, Kingswells for £41.28million and Trafalgar House, in Altens, for £4million.
North Sea oil and gas independent Chrysaor revealed earlier this month it had agreed terms to become the third and biggest tenant in The Capitol.
The company will spend the coming months fitting out its new Union Street offices, which will be home to around 200 staff.
Its lease covers more than 48,000sq ft, or in excess of 65% of the whole property over four-and-a half floors.
Professional services giant PwC has taken the 10,000 sq ft top floor of the building, Maclay Murray and Spens – one of Scotland’s biggest law firms – is moving its Aberdeen team into 5,049sq ft of the building’s fourth floor.