A buoyant oil price was behind a doubling of office take-up in Aberdeen last year compared to the level of activity in 2021.

Rising oil prices and a new licensing round for North Sea oil and gas exploration have provided grounds for optimism.

However, property agency Knight Frank has warned that windfall taxes and the SNP-Green government’s plans to wind down the oil and gas sector could see the property market contract.

The commercial property consultancy said that office take-up reached 385,583 sq. ft. in the Granite City during 2022, after 81,231 sq ft of office space was transacted in the final quarter of the year.

Last year’s figures received a major boost from Shell taking more than 100,000 sq ft at The Silver Fin Building in the first quarter. Around 281,000 sq ft of the deals – or 73% of the total – involved energy and supply chain companies.

A significant amount of the remaining space was taken by professional services companies that advise the city’s energy industry, including law firm Gilson Gray securing around 4,500 sq ft at Blenheim Gate.

With several deals carrying over into 2023, Knight Frank said there was cautious optimism in the city going into the first quarter of the new year.

Matthew Park, partner at Knight Frank Aberdeen, said: “Last year was much more positive for the city’s commercial property market, following two years of pandemic-related disruption. We expected take-up to reach 400,000 sq ft, but some of the deals have taken slightly longer to get over the line and should conclude in the first quarter of 2023.

“With the UK Government offering the potential of more than 100 new awards in the last North Sea licensing round, there are reasons to be cautiously optimistic for the year ahead.

“We are hopeful that provided the oil price stays high – above $80 per barrel – there will be continued demand for high quality office space across the market. 

“However, the windfall tax and the SNP-Greens’ recent announcement on their intention to wind down North Sea oil and gas activity are becoming factors in many energy companies’ investment plans for the years ahead. In turn, they could begin to have an impact on the city’s property market.”