Sheffield sees office take-up almost double in 12 months

A new report has revealed that office take-up in Sheffield almost doubled between 2016 and 2017.

The UK Regional Cities Market Review report for 2018 by Knight Frank, shows that a total of 393,700 sq ft was transacted across 2017 against 201,500 sq ft in 2016, 25% above the ten year average for the city with 85 deals completed in the year.

Despite a strong performance across its office markets, the report also highlights that Sheffield’s prime office stock last year fell to its lowest levels on record.

Peter Whiteley, head of the Sheffield office and partner at Knight Frank, said: “There was a good deal of activity across the offices sector in 2017, a reflection of the year shows take-up marginally short of registering a two-fold increase when compared to 2016.

“A 27,000 sq ft lease taken at CBRE Global Investors building The Balance on Trippet Lane by Johnston Publishing was the largest occupier transaction of the year and followed the sale of the company headquarters at Telegraph House on York Street to Tosca Commercial Property Fund for £3.6m. The new space has allowed the consolidation of both Sheffield-based staff and functions previously based in Leeds.

“Preceding the Johnston Publishing lease, Electronics firm Arm Ltd secured 20,000 sq ft at CityGate at Moorfoot in a move from Rockingham Court in the Devonshire Quarter to enable expansion.

“These two headline transactions serve to exemplify the growth of Technology, Media and Telecoms (TMT) occupiers in Sheffield in recent years.”

The sector accounted for 31% of take-up in 2017, up from 23% in 2016, the highest representation on record. Other TMT deals in 2017 included SDL taking 19,600 sq ft at Derwent House, Jaywing taking 16,000 sq ft at Albert Works and Sumo Digital taking a further 10,000 sq ft out of town at Jessop Riverside.

On the supply side, city centre Grade A availability in Sheffield measured just 150,000 sq ft at the close of 2017, the lowest level on record for the city.

Peter added: “Prime buildings with availability are 3 St Pauls Place, Acero and Steel City House, all of which are securing good take-up. The development pipeline however, remains limited, with works due to complete on just 81,000 sq ft of office space split between Steel City House and the NUM Building in 2018. Steel City House has already secured British Business Bank to the top two floors of the development.

“Beyond this, a further 51,000 sq ft is proposed at Vidrio, Digital Campus opposite the train station by Scarborough Property Group, although a firm date for delivery is yet to be announced.

“Also of note is ARBA Group’s Meadowhall Business Park offices, located out of town, opposite the new Ikea store close to J34 M1. The development comprising approximately 70,000 sq ft in five buildings has seen superb take up over the last year. The most recent being Tuffnells in 15,000 sq ft. There is roughly 26,000 sq ft available to let with suites from 3,750 sq ft.”

Total investment volumes rose above £50m for the second consecutive year in Sheffield reaching £54m by the year-end.

The acquisition of 2 Cutlers Gate by UK Commercial Property Trust for £20.16m was the largest office sale recorded in 2017. Bought from Ediston Property Investment Company, the 61,000 sq ft building is let to Capita Business Services with 22 years remaining on the lease at the time of sale.

In June, Bracknell Forest Council acquired 1 Nunnery Square from DVS Property Ltd for £17.1m, in a deal that reflected a net initial yield of 6.2 per cent. The 72,000 sq ft office is let to DSG Retail Ltd. Lease expiry is in 2029.

Overseas buyers also represented 13% of transactions in the city, down from 82% in 2016.