Confidence returns to Sheffield office market

THE Grade A office take-up in Sheffield city centre more than doubled in the last quarter of 2013.

Rob Darrington, partner with Sheffield-based property consultancy Commercial Property Partners (CPP), revealed that 21,814 sq ft of prime office space had been leased between October and December last year – more than double compared to the equivalent period in 2012 when only 9,979 sq ft of Grade A office space was let during the last three months of the year.

Mr Darrington said: “This substantial increase in take-up is a sure sign that confidence is returning to the Sheffield office market, especially for prime office space. This is excellent news and I expect this confidence to be maintained this year.

“Significantly, 79% of the deals completed in the last quarter were below 5,000 sq ft and the demand came from private businesses, rather than the established legal, professional and financial sector. This, again, is a telling sign that confidence in the UK economy is returning

“42% of transactions were in Grade A space, but it is interesting to report that the demand for Grade A space still out strips the available accommodation, which could lead to some long-awaited speculative development in Sheffield city and beyond.”

He revealed that headline rents in the new build Grade A developments, such as CTP’s 3 St Paul’s Place and the next phase at Sheffield Digital Campus, now range from £23 – £25 per sq ft. Existing Grade A space in ring-road locations is now available at £13 per sq ft. Meanwhile, existing refurbished buildings which are located in the restricted Business Core are now achieving rentals of £12.00 per sq ft.

Darrington said: “The increased confidence in the market at the moment will see quoting rents increase. It is expected that there will be evidence of rental growth on good quality stock in the city centre core early this year.”

Darrington highlighted that 2014 will be the third year in a row which has seen the market improving, however, said that although the actual number of deals is increasing, the region has lacked any significant-sized deals, which are needed to ensure take up figures reach the levels they were pre-downturn.

“For example the take-up in Sheffield city centre in 2007, when the property market was booming, was 242,900 sq ft, compared to 125,156 sq ft last year, so there is still a long way to go. Nevertheless we are travelling in the right direction,” he said.

“Ultimately, the fortunes of Sheffield’s city centre office depend heavily on what decision is made in relation to the proposed new retail quarter.”

The combined city centre and out-of-town office take-up level in 2013 was 255,352 sq ft, compared to 189,889 sq ft in 2012. The highest total level of take-up in the last 10 years was seen in 2009 where Sheffield saw 386,884 sq ft.