Top office rents in Aberdeen were above those for Glasgow during 2016 despite commercial property market woes in the Granite City, a new report from Savills says.
In its latest office Market Watch, Savills highlights a figure of £32 per sq ft for the choicest properties in Europe’s energy capital.
Prime office accommodation in Edinburgh was more expensive last year at £33.50 per sq ft but Glasgow’s £30 rate pushed Scotland’s largest city into second spot behind Aberdeen.
Savills says Scotland’s office market remained buoyant overall, with 2.3million sq ft of lettings across Aberdeen, Edinburgh and Glasgow – some 10% above the long-term average.
Total office investment in the three cities in 2016 reached £565million, the report adds.
According to Savills, public services, education and health was the most active business sector in the Scottish office market last year.
The report says falling supply in Edinburgh and Glasgow was more than offset by a 51% increase in availability in Aberdeen, where new projects have coincided with a severe downturn in the local economy, leaving the Scottish total 19% lower.
Savills reports a prime yield of 7.25% for offices in Aberdeen, with Glasgow and Edinburgh both returning 5.5%.
Nick Penny, head of Savills Scotland, said yesterday the office market “held firm” last year and continued to so so despite political uncertainties.
He added: “As office supply diminishes in Edinburgh and Glasgow, rents remain strong … as does investor appetite for prime office buildings.
“In Aberdeen, while take-up in the office market is subdued on the levels seen before the fall in oil prices, activity is improving and the expectation for Q1 2017 is good.
“All three cities could benefit from the ongoing shift by investors towards secure income.
“With lower returns volatility for Scottish assets and yields remaining attractive in comparison to other UK regional markets, one of the biggest challenges going forward could simply be the lack of sizeable commercial assets north of the border to invest in.”