The price of Brent Crude Oil hit $80 per barrel in mid-May (2018) and with some speculators suggesting further rises up to $100 per barrel, we expect this will further boost drilling and oil production activities which in turn will improve demand for commercial and industrial property in the Aberdeen area. 

2017 marked a number of corporate deals in Aberdeen, a key indication of latent office demand. Private equity backed Chrysaor received £1.6 billion of funding during 2017 and later last year signed for 48,000 sq ft of offices in the Capitol, expanding from around six employees on inception to approximately 450. The company has been able to benefit from lower operating costs by acquiring capital from major oil and gas companies at a discount.

While many of the multinational oil producers have turned their attention to deploying capital in more cost-effective global locations, including Saudi Arabia and Kuwait, this has created an opportunity for smaller engineering companies to acquire North Sea capital. Siccar Point could be among the next fast growth oil and gas companies expanding in the city.

It’s not only oil extractors who are considering expansion in Aberdeen. Exploration firms are now weighing up taking on further risk. This will indeed create new demand for office space in Aberdeen which Savills expects to reach 450,000 sq ft this year, 20 per cent above the level recorded last year.

We also expect the number of occupational deals to increase during 2018. Whereas 2017’s improved level of take-up was in part driven by Total’s 108,000 sq ft deal at Westhill, 2018 will see a stronger sub 5,000 sq ft market, largely led by the oil and gas sector, providing the Aberdeen market with a much needed confidence boost.

Beyond the oil market, Aberdeen is set to benefit from the £745 million Aberdeen’s Western Peripheral Route (AWPR), currently Scotland’s largest infrastructure project. AWPR is set to complete in summer 2018 and will provide improved access from the south to the city centre.

Office market fundamentals continue to improve in Aberdeen and as long as the oil price remains stable, the Aberdeen market will continue to benefit from the uptick in enquiries throughout the year.

Further information

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