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Available space at record level

Oil slump hits Aberdeen office market

Katherine MonroThe oil and gas sector is taking its toll on the Aberdeen office market with empty floorspace reflecting the scale of the slump.

Available space in has surpassed two million square feet for the first time, according to new data released by Knight Frank.

The figure excludes office developments currently under construction, such as Marischal Square, The Capitol and The Silver Fin.

With significantly reduced tenant demand, as the result of cost cutting in the oil and gas sector, the supply/demand dynamics have turned 180 degrees, it says.

Katherine Monro, a partner in the Aberdeen office of Knight Frank, said: “The new supply figures clearly demonstrate the impact the changing face of the oil and gas industry is having on the office market.

“Many of the developments which are now being concluded were committed to well before the low oil price began to take hold and at a time when conditions in the commercial property sector were very different.

“Whilst there will be obvious concerns from a developer’s perspective, there are naturally opportunities for occupiers which did not exist previously. The availability of space, and the competition to attract tenants, is reflected in competitive rents as well as enhanced incentives.

“For businesses looking to establish a presence in Aberdeen it is an optimum time and similarly we are also seeing interest from those already operating in the north-east who recognise the advantages to relocating. Incentives play a major part in that decision making process, as does the potential for efficiencies offered by the latest office design and construction practices.

“Whilst the headline figure is significant, it could yet rise as there are a number of large scale office developments currently under construction in the city centre. These will bring in excess of 350,000 sq ft of offices onto the market within the next 12 to 18 months.”

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