Market snapshot

Office Market Pulse Sheffield Q1 2017

Following a generally subdued 2016, Q1 2017 saw transaction volumes triple across Sheffield resulting in an impressive 170,000 sq ft of take-up.

With a good number of larger requirements in the marketplace and 128,000 sq ft of new office space approaching completion providing further inward investment opportunities, we anticipate 2017 to be a strong year.

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In this issue:

Confidence returns to Sheffield’s occupier market

Following a somewhat subdued 2016 in terms of number of transactions, Q1 2017 saw three times the amount of deals completed across Sheffield than the previous quarter, resulting in an impressive 170,000 sq ft of office space being occupied.

While the Professional Services sector accounted for the lion’s share of activity in terms of number of deals, the burgeoning TMT sector saw the largest volume of space taken-up during the quarter – a trend which is currently being witnessed across all of the major Northern Powerhouse cities.

The majority of activity remains focused within the city centre, with refurbished buildings such as St James House in the Cathedral Quarter experiencing a flurry of new lettings.

In contrast to 2016, where the vast majority of deals were sub-5,000 sq ft, Q1 2017 saw a number of larger deals complete, with four transactions in excess of 15,000 sq ft. There are also a good number of larger requirements in the marketplace, suggesting that confidence is returning among the larger corporates. 

Key occupational transactions, Q1 2017


Property 

Size (sq ft) 

Landlord(s)/ vendor

Tenant/purchaser

Derwent House, Heart of the City
19,600
Pramerica Real Estate Investors
SDL
Derwent House, Heart of the City
16,400
Pramerica Real Estate Investors
Mott Macdonald

Albert Works, Cultural Industries Quarter
16,000
City Estates
Jaywing

Source: Lambert Smith Hampton

Jaywing

Jaywing

Office supply to receive welcome boost in Q2 2017

Grade A office supply across Sheffield continues to dwindle, particularly in the city centre which currently has just over 113,000 sq ft of readily available stock across six buildings – only two of which are capable of accommodating a requirement of over 10,000 sq ft.

The demolition of the former Grosvenor Hotel is close to completion, which will pave the way for the construction of HSBC’s new 140,000 sq ft offices and will hopefully stimulate further development starts. Meanwhile, the imminent completion of Acero Works at Sheffield Digital Campus and refurbishment of Steel City House and Westfield House (Formerly Milton House) will inject a further 166,000 sq ft of much-needed Grade A/B space into the market.

Permitted Development continues to remove tertiary stock from the market and while student residential schemes have begun to slow down we are now seeing increasing activity in the Build-to-Rent sector.

Refurbishments drive grade B rents upwards

Rents are likely to remain stable throughout 2017 although the imminent completion of Acero Works at Digital Campus will provide the opportunity for a marginal increase.

The biggest rental growth continues to be for high-end grade B space where refurbished schemes have driven rents significantly upwards.

Lack of stock hampers investment volumes

Despite a healthy demand from investors, the office investment market in Sheffield is characterised by a lack of good quality stock, which has impacted on transaction volumes.

As a result of the pent up demand, together with the continued low interest rates and a lack of alternatives, well-let buildings with solid unexpired lease terms are likely to attract significant interest.

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Tom Burlaga

0114 270 2706

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Tom Burlaga
Associate Director - Agency

0114 270 2706

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