The Sheffield Office Market Pulse, which provides investors, occupiers and developers with detailed insight across the city, found that, following a subdued 12 months with a limited number of transactions, the Sheffield office market rebounded in Q4 2016; largely as a result of the significant deal agreed with HSBC for 140,000 sq ft of new office space in the proposed retail quarter.
While take-up during 2016 was predominantly dominated by the out-of-town market, Q4 saw a large number of transactions for office space in the city centre, with long-term vacant offices such as CityGate and Synergy finally securing tenants.
Tom Burlaga, who heads up the Agency team in our Sheffield office, commented: “We anticipate further rental growth and the hardening of incentives in the out-of-town market as a direct result of limited speculative development. The majority of existing deals are churn transactions and we anticipate the completion of new, high quality office accommodation in 2017 will be a catalyst for further inward investment.”
Total office supply remained relatively constant throughout the year at approximately 549,000 sq ft, but 2017 will see a sharp increase in grade A space following the completion of Digital Campus. This could offer scope for a marginal increase in rents, which remained stable last year.
Grade B space will increase with the completion of 60,000 sq ft of refurbished office space at Steel City House, while HSBC’s letting at the former Grosvenor Hotel site should hopefully kick start development at the new retail quarter.
There was a sharp fall in office investment transactions across Sheffield during Q4 2016, reflecting the lack of prime stock being brought to the market.
Abid Jaffry, Head of Capital Markets North at LSH, commented: “While the ongoing Brexit negotiations will no doubt create uncertainty for some, it is also likely to open up opportunities to a wider investor base. As a result, we anticipate renewed activity during the first half of 2017.