The raft of leases due to expire over the coming five years will fuel a return to speculative development across South Yorkshire, according to Guy Gilfillan, Head of our Yorkshire offices.
Guy explained: “Data from our National Property Database (NPD) shows that over 450 businesses across South Yorkshire will consider their property options over the next five years, as their lengthy leases reach expiry.
Businesses looking to relocate
“A high proportion of businesses affected will no doubt be looking to relocate to get better, more cost effective accommodation. However, the availability of office accommodation in Sheffield is decreasing, with a large proportion of it is unlikely to meet occupiers’ aspirations in terms of quality, quantity and location.”
Enterprise Zone status attracting businesses to the region
Guys added: “The Enterprise Zone will prove a useful tool in encouraging companies to grow and expand in South Yorkshire. Despite being relatively limited in its scope, and certainly not the property developer saviour that the Enterprise Zones of the mid 1980s were.
Pre-lets will increase and help market recover
With no new development underway, there is a growing feeling that an increasing number of occupiers are likely to consider pre-letting new floor space, giving rise to a return to speculative development activity.
“Pre-let activity led us out of the last property downturn. Finance is generally still tight, but if a developer can demonstrate a good quality pre-let, many lenders are keen to start discussions in respect of funding the project.”
Guy concluded: “The market is sufficiently close to reaching a balance between the lack of available stock desired by occupiers, and anticipated levels of demand. This indicates that a return of commercial development activity is likely over the next 12 to 18 months.