2015 sees highest recorded occupier market in Sheffield

2nd September 2015

Occupier market activity in Sheffield reached a new high in the first half of 2015 according to research from commercial property consultants Knight Frank, as take-up totalled 306,000 sq ft - the highest H1 ever for 10 years.

This figure exceeds the total office take-up for 2014, placing Sheffield on course for a record year. Both Q1 and Q2 set new quarterly records for take-up, with figures of 126,000 sq ft and 179,000 sq ft respectively. Nearly 50% of take-up in H1 involved new and high quality office premises, increasing the pressure on Grade A supply. However, as the development of 3 St Paul's nears completion in December 2015, the city centre will benefit from 76,000 sq ft of Grade A space, providing a prime opportunity in the heart of the city to potential occupiers. In addition, the ongoing refurbishment of Milton House will provide another 35,000 sq ft of office space on completion due Q1 2016. Ben White, partner in the Sheffield office of Knight Frank, said: "Deals in H1 were largely driven by the Public Sector and the Technology, Media and Telecoms (TMT) industry, which collectively accounted for nearly 70% of total take-up. "The two main universities in Sheffield were among the most active occupiers, with the University of Sheffield purchasing 65,500 sq ft at V2 Velocity in March 2015, while Sheffield Hallam University secured 50,218 sq ft at Fitzalan Square." Current market sentiment suggests that prime headline rents could rise for the first time in five years, from £20 per sq ft to £23 per sq ft, by the end of 2015, potentially faster than all other regional cities. Ben added: "Nevertheless, Sheffield still offers occupiers one of the most cost-effective business locations across the UK's regional cities and especially in Yorkshire, where prime rents are touching £26 per sq ft and expected to rise to £27.50 by the end of 2016. "With a record year for take-up in prospect, it will be interesting to see if the steady rise in activity encourages developers to adopt a more proactive stance in this buoyant market." With regards to investment properties, Sheffield continues to be the highest amongst other regional cities offering prime office yields of around 6.75 per cent. Investment deals included a private investor purchase 3 Carbrook Triangle for £500,000 in April reflecting a net initial yield of 6.9 per cent. Ben added: "The city therefore offers an attractive option for investors looking for higher returns. The development at 3 St Paul's could generate fierce competition as investors look to take advantage of the first new office development since the recession in 2008." For further information on commercial property across South Yorkshire contact Knight Frank on 0114 272 9750.