| Proactive Solutions to Property Pinch Points in the North East |
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The oil and gas industry which drives the economy of the north-east of Scotland – and is a key element of the wider Scottish economy – is enjoying buoyant times. A sustained high oil price is encouraging greater investment in offshore exploration and production work. Oil operators and the extensive supply chain that supports them are busy. Many of these businesses are consequently having to look to their property portfolio as they seek to cope with busier order books and increases in staff numbers. They are confident of a continued period of growth in the industry, but in many cases they need more space. But the solution is less straightforward. The commercial property market in Aberdeen and the surrounding area is characterised by high demand and a lack of supply. Companies face challenges as they seek to find or create accommodation which suits their business needs. A combination of factors – including the limited availability of land for development and the sustained high oil price - means prices are high. In areas such as Westhill, just outside Aberdeen, land prices are reaching over £500,000 an acre, while city centre rental rates are approaching £23 per sq ft. These factors have added complexities to the decision-making process. “There is more than one way for companies to find a property solution that, crucially, will support their long-term growth aspirations,” says Steve Judge, managing director of architecture and space planning business Space Solutions. “There are options for companies to get out of this property dilemma. The route that many companies are taking is to overcome the potential obstacles to new-build by refurbishing and/or expanding their existing facilities, or securing available existing properties and making them fit for purpose. “There are opportunities for new-build, but a significant proportion of those looking to grow are securing properties and tailoring them to meet their needs.” One concern, Genesis Oil and Gas Consultants, moved across the city’s West End in the autumn into bigger premises. The design team at Space Solutions transformed the traditional 12,400sq ft granite property into modern office accommodation for developer Knight Real Estate and Genesis was delighted to be able to lease the premises and fit them out to meet its unique requirements. “The project is a textbook example of a growing, successful company finding its accommodation solution in bringing new life and modern space concepts to a traditional city centre building,” said Steve Judge. “It’s all about working smarter and working with clients to come up with ideas that work for them.” One of Space Solution’s biggest projects to date has been designing and managing the interior refurbishment of new offices for a major player in the oil industry. Maersk Oil North Sea UK Limited inherited existing offices on the south side of the city, following its takeover of Kerr McGee and embarked on a feasibility study to understand the potential of the premises. Refurbishment works on the 53,800sq ft, five-storey building is being carried out on a phased basis to allow for the continued occupation of the offices. “It’s all about using existing space a lot better,” said Steve Judge. “The reorganisation of the Maersk building has created space for an extra 100 people without any extension work required. And again, it’s bringing a new lease of life to a building that had already served the energy industry well over the past few decades but which was in need of revitalisation.” The main building contractor has been appointed and work is expected to get underway this autumn. It is due for completion in September 2007. There are also examples of businesses broadening their horizons – and infrastructure – on their own doorstep. International energy services company PSL has established new headquarters on a 2.6 acre site adjacent to its existing premises at Portlethen, south of Aberdeen. Knight Real Estate, a sister company of Space Solutions, concluded the deal to lease the development to PSL in a 20-year agreement. The new HQ and workshop facility will accommodate up to 100 key staff with the capacity for a further expansion of accommodation for another 130 when required. Knight Chairman James Barrack said: “Knight was well-placed to offer this turnkey design, build and lease development service for a company that has grown significantly in recent years and is likely to continue to do so. Such options make sense in the prevailing market conditions in the north-east of Scotland. “It’s important to stress that there are still opportunities for new development, particularly on the periphery of the city. “We’ve secured land at, for example, Westhill and Dyce for a combination of speculative and design and build developments, and there are others around. These strategically important projects are particularly important to meet the needs of businesses, not least new inward-investors attracted to the region in the context of the upbeat trends in the energy sector and the potential to grow here. “In a much broader context, the signals from a property perspective are very positive for the energy industry in the region. A number of the big operators in the industry – BP, Shell and Chevron among them - have recently announced or are undertaking ambitious developments which indicate their long-term commitment to the North Sea, while there are numerous examples of other players going down the renovation or expansion routes. “These development trends serve to illustrate the fact that the energy sector in the region has for some time been responding to the changing dynamics of the global industry. While it is acknowledged that there is still a great deal of life left in the North Sea province, companies along the supply chain have long been working to internationalise their business and move into new areas of commercial operation, such as renewables, to support their long-term prospects. “All these mean the north-east of Scotland will remain a global hub of energy activity in the long-term, and commercial property trends will undoubtedly reflect that.” |
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