Office take-up in Sheffield has almost overtaken last year’s total letting figure, according to Lambert Smith Hampton. But, warns the property management company, there has been a “significant” fall in the number of second quarter Grade A deals.
The first half of 2015 has already seen more than double the amount of deals transacted in the South Yorkshire city compared to last year, the firm’s Office Market Pulse survey discloses.
Deal sizes remain relatively low — with more than three quarters below 5,000 sq ft — with the letting of the 50,000 sq ft Old Post Office in Fitzalan Square to Sheffield Halam University the year’s largest deal so far. LSH stresses that despite the smaller floor area, take-up still remains a third ahead of the same period in 2014.
Tom Shelton, a senior surveyor at LSH’s Sheffield office, explained the latest figures showed there was significant confidence returning to the market, “which could lead to further much-needed Grade A development to help ease the city’s supply problem,” he added.
“The Sheffield office market is enjoying a strong year, but good quality premium space remains in short supply, which continues to be a barrier to attracting major new occupiers to the city.”
He said the addition of 80,000 sq ft at 3 St Paul’s Place later this year will ease the city’s Grade A squeeze. “Further speculative development is necessary, however, to really unlock Sheffield’s full potential as it looks to reap the benefits of wider investment around the Northern Powerhouse project and an increase in devolved powers to the regions, Shelton continued.
Office take-up in city centre and out of town markets reached 170,980 sq ft between April and June, taking the total so far this year to 286,657 sq ft. The total for 2014 was 289,176 sq ft.
The Pulse survey also revealed the majority of Sheffield’s transactions were for Grade B space — with just 16 per cent Grade A — compared to 70 per cent for the first six months of 2014.
The demand for Grade B space has pushed rents up to £13.50 per sq ft while headline rents for Grade A space remain around £22 per sq ft, although they are likely to increase once to £23 per sq ft once 3 St Paul’s Place comes to market.
Sheffield also saw its first investor activity for almost 18 months with the acquisition of Three Carbrook Triangle, but the continuing lack of prime stock is likely limit any further activity in the immediate future claimed Shelton.
Source: LSH Press Release
