Latest research from global real estate advisor CBRE shows that the industrial market in Aberdeen continues to exhibit healthy signs of recovery, with a record number of transactions taking place in 2018.
Take-up totaled 658,000 sq ft for the year – in line with the five-year average and an increase of over 14% from 2017 and over 50% from H2 2017.
Smaller deals dominated, with sub 10,000 sq ft lettings accounting for 73% of all transactions. This suggests growing confidence in the market from smaller-scaled companies that are now planning for future business growth.
The two largest deals of 2018 were both out at Westhill with TechnipFMC and Proserv acquiring industrial facilities extending to 34,200 and 59,800 sq ft respectively.
Industrial supply levels at the close of 2018 stood at 2.43m sq ft, a rise of 7% from 2017, an encouragingly more conservative increase than in previous years and a further sign the market may be levelling out. Despite high supply levels, there is a low amount of prime industrial stock available within Aberdeen, with prime rents expected to remain at £9.00, £18.00 and £2.00 per sq ft for the warehouse, office and concrete yard elements respectively.
Iain Landsman, associate director at CBRE commented: “On the back of a few challenging years, 2018 saw positive sentiment return to the market. The uplift in the wider energy sector is now filtering through to the commercial property sector with many service companies now having the confidence to make property decisions and using the market conditions to relocate to better quality or more prominently positioned properties.
“Whilst it appears a corner has been turned in the market, the vacancy rate is just under 22%, and landlords still face many challenges with much of this empty stock being burdened by overprovision of office space. The changes in the vacant business rates continue to add to the problems landlords face and is leading to a sharper fall in rents, especially in poorer quality second-hand stock.
“Occupier demand still remains strongest for properties which present well. With such a wide selection available to occupiers just now we are recommending that landlords invest capital in their property to get them as close to ‘walk in condition’ as possible.”
“A further testament to the recovery of the sector is that we are witnessing speculative development for the first time since the downturn, with multi-let schemes being built at Westhill, Altens and in Portlethen. There are also a number of larger requirements for occupiers considering bespoke developments which is extremely positive as they look to commit their future to the North-east.”
“We’re definitely more upbeat about the performance of the industrial market in Aberdeen and the outlook for well portioned and higher specification properties should definitely be more positive than in recent years. 2018 was undoubtedly still challenging, however, the stats show that in terms of volume of transactions there were 80 deals which is the highest volume of transactions in the market in the last 10 years.”