Market snapshot

Office Market Pulse Sheffield Q1 2015

Take-up for Q1 2015 for Sheffield City Centre and out of town office markets was 115,677 sq ft – almost four times the Q1 2014 figure of 30,367 sq ft.

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In this issue:

Sheffield’s universities get office market off to flying start in 2015

Q1 2015 take-up for the combined Sheffield City Centre and out of town office markets was 115,677 sq ft – almost four times the Q1 2014 figure of 30,367 sq ft.

Both of the city’s universities continue to be active developers and occupiers in the market, contributing towards the Q1 2015 city centre take-up figure of 104,511 sq ft. While this is an impressive result and a great start to the year, it is worth noting that, at 65,500 sq ft, The University of Sheffield’s acquisition of V2 at Velocity accounted for almost two thirds of this figure.

Out of town, activity remained slow with Q1 2015 take-up standing at 11,166 sq ft - a 50% decrease on the Q1 2014 total of 21,967 sq ft.

The average transaction size across both city centre and out of town markets for Q1 2015 was approximately 8,900 sq ft, with over 75% of activity for office space in the sub-10,000 sq ft size bracket. However, the key point to note is that, excluding The University of Sheffield deal, over 90% of the total take-up was for secondary accommodation, with no Grade A deals taking place in the city centre.

Market Snapshot Section

We have seen a marked increase in the number of obsolete office buildings converted to student/private residential accommodation, which has inevitably led to a dwindling supply of good quality secondary stock.

However, the completion of Building 3 St Paul’s Place in Q4 2015 - the first speculative office development since the recession - will add 80,000 sq ft of much needed Grade A space to the market. Additionally, the construction of a new phase at Sheffield Digital Campus, coupled with the major refurbishment of Milton House will provide a pipeline of good quality accommodation over the coming years.

Plans have also been announced for the new retail quarter in the heart of Sheffield city centre, which will ultimately result in further inward investment and hopefully attract other occupiers into the city.  This could provide a catalyst for further speculative development or good quality refurbishments.

Key occupational transactions Q1 2015


Property 

Size (sq ft) 

Landlord(s)/ vendor

Tenant

V2, Velocity
65,500 Moorfield
Sheffield University
Furnival Street
20,000 TBC
Sheffield Hallam
2 St Paul’s Place, Unit 3
2,850 Department of Education
Lambert Smith Hampton
Source: Lambert Smith Hampton

Grade A rents to rise for first time since 2008

While rents for Grade A space have remained fairly stable over the last few years, we anticipate the completion of Building 3 St Paul’s Place will establish a new headline rental level of £22 per sq ft - the first increase since 2008.

Similarly, the dwindling supply of good quality secondary accommodation has led to stronger headline rents of £12 per sq ft upwards, with a small anticipated increase by the end of 2015.

No sign of election slowdown

Q1 investment volume reached £19.1bn, the second highest quarterly total on record after Q4 2014.

The All Property transaction yield dropped below 6% for the first time in seven years.

Specialist sectors accounted for a record 20% share of volume.

View the latest edition of our UK Investment Transactions (UKIT) report. 

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Tom Shelton

0114 270 2705

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Tom Shelton
Associate Director - Agency

0114 270 2705

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