Market snapshot

Office Market Pulse Sheffield Q3 2015

The Sheffield office market experienced an impressive Q3 2015, with a combined city centre and out-of-town take-up of 93,380 sq ft – up 43% on the same period in 2014. The city centre also recorded a new headline rent of £23 per sq ft following Arup’s exchange on 3 St Paul’s Place.

These robust conditions have led to a notable improvement in the investment market, which saw two deals transacted, totalling £16.82m. 

You can download a PDF version of this Sheffield Office Market Pulse, or to read and sign-up to Office Market Pulses from other UK centres.

In this issue:

Robust levels of office leasing activity despite marked slowdown from Q2 2015

The Sheffield office market experienced an impressive Q3 2015, with a combined city centre and out-of-town take-up of 93,380 sq ft – up 43% on the same period in 2014, albeit some 45% down on an exceptionally strong Q2 2015.

Activity was dominated by the presence of two significant deals to professional services firms; namely 13,000 sq ft to Wake Smith at Velocity in the city centre and 12,000 sq ft to Frogomen at Savile House in Attercliffe.

The number of transactions also increased - from 8 in Q3 2014 to 25 in Q3 2015. However, the overall deal size remains low at 3,735 sq ft, illustrating the continued demand for space of sub-5,000 sq ft.

At 58,391 sq ft, the out-of-town market accounted for almost two thirds of the total take-up for the quarter, compared with just 30% during the same period in 2014. However, a large proportion of this comprised just two deals totalling 21,000 sq ft.

Squeeze on grade A space continues but new developments will provide welcome relief

Total office supply across Sheffield’s combined city centre and out-of-town markets stood at 785,108 sq ft at the end of Q3 2015 – two thirds of which is for grade B/C space. However, this poorer quality stock is gradually being eroded as buildings are converted from offices to residential under Permitted Development Rights, placing increasing pressure on an already restricted supply of grade A space in the short-term.

Looking ahead to 2016, 3 St Paul’s Place will provide a much-needed injection of grade A space to the market, while works are also due to commence on the next phase of Digital Campus, providing a further 128,375 sq ft of space, and the only grade A floorplates in excess of 10,000 sq ft.

Steel City House is also to undergo an extensive refurbishment, with work starting in 2016, releasing an additional 62,985 sq ft of good quality space into the market.

Key occupational transactions, Q3 2015


Property 

Size (sq ft) 

Landlord(s)/ vendor

Tenant

Velocity 13,000 Moorfield Group Wake Smith
Savile House 12,000 Urban Properties Frogomen
3 Hawke Street 9,030 Litton Developments Sodexho
Fountain Precinct 8,750 Kames Property Chorus Law

Source: Lambert Smith Hampton 

New record rent for Sheffield city centre

Arup’s exchange on 3 St Paul’s Place at £23 per sq ft is a new record headline rent for Sheffield city centre.

A lack of good quality grade B space is driving secondary rents up to £14 per sq ft.

Prime Out-of-town rents remain stable at £14 per sq ft.

Investment activity picks up as value gap between London and the regions increases

The value of office investments transacted across Sheffield during Q3 2015 totalled £16.82m - a marked improvement on 2014, which saw limited investment activity.

This burgeoning level of interest is driven by Sheffield’s improving occupational market, and the ever-increasing yield gap between London and the regions, which now represents solid growth potential.

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

Key investment transactions, Q3 2015


Property 

Value (£m)

Investor

Vendor

Ventana House, Digital Campus
14.00 Kames Capital Scarborough Group International
Furnival House, 48 Furnival Gate
2.82 Private investor LPA Receivers

Source: Lambert Smith Hampton 

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