Market snapshot

Office Market Pulse Sheffield Q4 2017

Sheffield’s office occupier market witnessed a strong finish to 2017 as take-up in the final quarter pushed overall figures to 385,602 sq ft for the year, some 24% ahead of 2016 and well above the 10-year average. 

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In this issue:

Digital Campus provides catalyst for letting activity

Combined take-up across the city centre and out-of-town markets reached 75,315 sq ft in Q4 2017. The completion of new grade A space at Digital Campus was a catalyst for activity, including technology company Simcyp lease of 14,000 sq ft at Acero Works. As a result of its success, a new phase is planned for construction in H1 2018.

Other notable transactions included Sheffield Hallam University’s acquisition of 17,000 sq ft at Aspect Court and British Business Bank’s lease of 11,300 sq ft at 5/6 Steel City House.

Asset management key to future growth

Repositioned grade B buildings continue to perform well and have seen solid rental uplifts and good levels of take-up. With only circa 135,000 sq ft of grade A accommodation available in the city centre, and no new development currently underway, this trend is likely to continue throughout 2018.

Out-of-town, demand remains focussed on freehold, pavilion style offices for which there is a dwindling supply.

Cautious optimism for investment market

Despite a handful of larger office  investment transactions taking place across Sheffield during H1, just one deal completed in Q4; namely UKRO’s purchase of Riverside West, a 40,592 sq ft, 2001-built office unit located on the fringe of the city centre, for 6.85m (7.60% NIY). This deal brought the total investment volume for the year as a whole to £50.4m; more than half that of 2016.

However, some ongoing transactions including CityGate, a mixed-use office and hotel investment which was brought to the market in Q4 2017 for £18m (6.88% NIY) and is believed to be under offer, will hopefully set a more encouraging tone for 2018.

Interest remains driven by current occupier sentiment and large scale improvement projects throughout the city core and the key challenge going forward will be to communicate the long-term sustainability of the Sheffield office market to the investor community.

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Tom Burlaga
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0114 270 2706

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