Shifting business trends and preferences have led to once popular offices in Aberdeen's West End losing their appeal with many big granite buildings now empty or underutilised.
Built between 1880 and the 1920s, these buildings were originally large houses, with many converted much later into office space in response to growing business demand driven by North Sea oil and gas activity.
But since the 2014 oil and gas downturn, business needs have changed, resulting in neglect in some areas, impacting on the vibrancy of the West End of Aberdeen, says a new report from the University of Aberdeen’s Centre for Real Estate Research.
Professor Norman Hutchison explained: “Changes in office space requirements due to technological advancements, evolving work cultures and the oil and gas downturn have left many historic buildings vacant. This situation provides an opportunity to explore the possibility of converting these properties back into residential properties or finding alternative sustainable uses to revitalise the area.”
However, this may not be that simple, as the MacRobert Chair of Land Economy outlined: “Decreasing demand for traditional office spaces, along with broader economic factors such as declining house prices, building material cost inflation and high interest rates complicates the feasibility of converting these buildings into residential properties or renovating the existing spaces to preserve these as office units and make them more appealing to businesses.”
The report focuses on the West End of Aberdeen only - mainly centred around Queen’s Road, Carden Place and Albyn Place which features a diverse mix of offices, schools, hotels, residential flats and a private hospital. It does not cover office space elsewhere in Aberdeen.
Aberdeen City’s population is estimated to be 224,000 – the lowest it’s been since 2012, says the research. Direct employment in oil and gas has also declined, falling from a peak of 30,600 in 2015 to 21,000 jobs in 2021.
The West End office market comprises 906,974 sq. ft. of office space with 28.35% - or 257,140 sq. ft - of that currently vacant. Street level analysis of Rubislaw Terrace / Queen’s Terrace further depicts an “alarming picture” with an “abnormally high vacancy rate of 48.35%”.
The report blames West End office market challenges on the following factors:
- The oil and gas downturn leading to reduced demand for city office space - despite refurbishments and conversions to open-plan layouts, some properties remain vacant while others fail to sell at auction for a fraction of their former value
- Rising costs - with the upgrading of existing office spaces becoming prohibitively expensive
- Unwanted cellular space – the mainly cellular office layouts in West End buildings are outdated and unattractive for modern use
- Shift to remote working
- Planning challenges – stakeholders report significant challenges aligning with planners’ expectations and there is concern about the time applications take
- Energy efficiency hurdles – enhancing energy efficiency in listed buildings is difficult and expensive
Professor Hutchison added: “Office vacancy is likely to remain high in the West End except in cases where the office space of Grade A standard or close to that standard.
“Persistent urban vacancy impacts the urban realm in many ways including the physical decline of the building structure and deterioration of surrounds, a plethora of To Let and For Sale boards, increased vandalism and a feeling in the neighbourhood of ongoing economic decline. A 28% vacancy rates indicates a market where the supply of office space heavily outstrips demand.
“It’s worth reflecting on whether incentives are needed from local and central government to encourage conversation of vacant office stock back to residential use. These incentives could take the form of fast-track planning approvals, more flexibility around building standards, tax breaks and even some grants or loans.
“The West End is adjacent to Union Street and bringing more residents back to this area may well help regenerate the wider city centre.”
The West End of Aberdeen Office Vacancy report is attached.