Market snapshot

Office Market Pulse Sheffield Q3 2017

Despite a slowdown in activity during Q3, 2017 continues to be a solid year in terms of office take-up. Indeed, we anticipate that over 400,000 sq ft will be transacted by the end of the year - well above the 10-year average – providing a significant boost for the city.

Both Acero Works and 3 St Paul’s - the first speculative office developments in over a decade - have seen strong levels of take-up and their success will hopefully be the catalyst for further quality schemes to come forward in the near future, thereby satisfying the latent demand and helping to capture more regional and footloose requirements.

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In this issue:

Final year take-up figures set to eclipse 10-year average

Following an impressive H1 2017, office take-up across Sheffield slowed during Q3, to reach 71,700 sq ft – up marginally on the previous quarter albeit some 14% down on the five-year quarterly average.

Positively however, take-up for the year-to-date has almost surpassed the total recorded for the entirety of 2016 and, with a number of larger deals in the pipeline, we anticipate 2017 will be a strong year, with total take-up in excess of 400,000 sq ft; significantly higher than the 10-year average.

Another encouraging sign in terms of occupier demand is the large volume of requirements in the marketplace for grade A space, which follows hot on the heels of BDP Architects’ letting of 8,000 sq ft at 3 St Paul’s and several deals that are currently under offer both here and at the newly completed Acero Works.

Key occupational transactions, Q3 2017


Property 

Size (sq ft) 

Landlord(s)/ vendor

Tenant/purchaser

The Balance
27,000
Undisclosed
Johnson Publishing
Meadowhall Business Park
15,000
ARBA Group
Tuffnells
3 St Paul's Place
8,000
CTP
BDP Architects

Source: Lambert Smith Hampton

Jaywing

Jaywing

Completion of Acero Works boosts grade A supply

City centre supply has been boosted by the completion of Acero Works at Digital Campus – Sheffield’s first speculative office development since 3 St Paul’s - which has released an additional 77,500 sq ft of grade A office space to the market.

However, half of this is already under offer, leaving less than 12 months’ supply of grade A space based on the five-year quarterly average take-up figures.

Work continues on a number of proposed mixed-use PRS and commercial schemes throughout the city centre, which have the potential to add significant levels of grade A space in the next 24 months and should satisfy this latent demand for high quality accommodation.

It is also hoped that the recent public realm improvements around Charter Square South and Furnival Gate, which will form part of the new retail quarter, will spur further development and alleviate any potential supply and demand imbalance.

Headline rents to reach £24.00 by the end of 2017

Office rents have remained stable for a number of years but the completion of Acero Works has provided the opportunity for small headline growth and we anticipate this will reach £24.00 per sq ft by the end of 2017.

Rental growth remains solid for high-end grade B space, where refurbished schemes continue to let well due to a lack of supply.

Lack of sellers dampens investment activity

Despite an uptick in deals during Q2 reflecting a perceived prominent demand, there were no office investment transactions across Sheffield during the three months to September 2017.

This is predominantly due to a lack of sellers, rather than any reluctance from buyers. Consequently, any stock that does come to the market has a ready demand.

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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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