sheffield office market · 2019. 3. 14. · to britannia invest a/s for £26.6 million. the breeam...
TRANSCRIPT
Peter WhiteleyPartner
KNIGHT FRANK VIEW
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
2013 2014 2015 2016 2017 2018
6.00
%6.50
%
6.50
%
6.25
%
6.50
%
6.00
%
£67m
£17m
£83m
£54m
£151
m
£40m
393
,712
201
,514
494
,283
274
,627
248
,402
363
,584
150,
000
175,
000
175,
000
250
,000
340
,000
80,
000
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
2013 2014 2015 2016 2017 2018
6.00
%6.50
%
6.50
%
6.25
%
6.50
%
6.00
%
£67m
£17m
£83m
£54m
£151
m
£40m
393
,712
201
,514
494
,283
274
,627
248
,402
363
,584
150,
000
175,
000
175,
000
250
,000
340
,000
80,
000
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
2013 2014 2015 2016 2017 2018
6.00
%6.50
%
6.50
%
6.25
%
6.50
%
6.00
%
£67m
£17m
£83m
£54m
£151
m
£40m
393
,712
201
,514
494
,283
274
,627
248
,402
363
,584
150,
000
175,
000
175,
000
250
,000
340
,000
80,
000
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
2013 2014 2015 2016 2017 2018
6.00
%6.50
%
6.50
%
6.25
%
6.50
%
6.00
%
£67m
£17m
£83m
£54m
£151
m
£40m
393
,712
201
,514
494
,283
274
,627
248
,402
363
,584
150,
000
175,
000
175,
000
250
,000
340
,000
80,
000
TAKE-UP (sq ft)
Year End 2018 363,584
2018 vs 10 year average +15%
GRADE A SUPPLY (sq ft)
Year End 2018 80,000
2018 vs 10 year average -75%
OCCUPIER HEADLINES
INVESTMENT HEADLINES
PRIME RENT (£ per sq ft)
PURCHASERS (last 12 months)
VENDORS (last 12 months)
DEVELOPMENT PIPELINE (sq ft)
OverseasUK Private
INVESTMENT VOLUMES (£)
Year End 2018 £151m
2018 vs 10 year average +162%
PRIME YIELD (NIY)
Year End 2018 6.00%
Forecast 2019 6.00%
SHEFFIELD OFFICE MARKET
£25.00
Year end 2018 Forecast 2019
£26.00• Occupier take-up reached 363,584 sq ft in 2018, 15% ahead of the 10-year average. Although deal numbers were down compared with 2017 (79 against 86), 2018 recorded three deals above 20,000 sq ft.
• During the year, co-working provider Spaces leased c.25,000 sq ft at Acero Works. The Home Office also let 21,000 sq ft at the Foundry House, with the building now fully occupied by public sector occupiers. In addition, South Yorkshire Housing Association secured 25,000 sq ft at Rockingham Court.
• Grade A availability continued to fall in 2018, dipping below the 100,000 sq ft mark by year end. The tight supply environment is set to continue with HSBC taking new space within Phase 1 of Heart of the City II and 1 Charter Square to be delivered in 2019. Only 26,000 sq ft of this will come to market vacant.
• Investment volumes reached £151m, a total more than double the 10-year average and a new record high for the city.
• The acquisition of Steel Vulcan House for £50 million by Legal & General Property was the largest office sale for the year. The 120,000 sq ft building is currently let to the Home Office.
• Another notable deal was the sale of Acero Works to Britannia Invest A/S for £26.6 million. The BREEAM ‘Excellent’ building forms part of Sheffield Digital Campus.
• Domestic money continued to underpin investment activity in 2018, accounting for eight out of nine deals completed and 82% of investment volumes.
• Prime yields remained at 6.00% throughout the year. Compared with the major UK cities, Sheffield offices now offer a discount of up to 125 bps.
26,000Speculative
0 0
00
166,000
2019 2020 2021
82%
18%
60%
40%
82%
18%
60%
40%
ABERDEEN LEEDSGLASGOW BRISTOL EDINBURGH CARDIFFSHEFFIELD NEWCASTLEBIRMINGHAM MANCHESTER
Dates indicate the potential completion date of schemes under construction as at Q4 2018Development schemes are inclusive of both new and comprehensive refurbishment.
Sheffield city centre is set to go through some exciting changes in regards to infrastructure, investment and opportunity. The City Council, working with Queensberry, delivering Heart of the City (HOC) II announced the next stage of development, The Pepper Pot, Block C is driving forward the agenda. This will feature retail units on the ground floor and 37,000 sq ft of office space above. In addition, Block B, known as Laycock House, which will also feature retail units at ground floor level and apartments above. Further, Urbo’s scheme, West Bar Square, a substantial 5.5 acre city centre mixed use development, with outline consent for over 1m sq ft of space is on track.
The design framework is for offices with large floor plates that can accommodate business from 20,000 sq ft to in excess of 600,000 sq ft. This will combine with other uses including apartments, hotel, car park, restaurants and shops to create a vibrant mixed use neighbourhood within the city centre. Tech, professional services and the public sector continue to dominate office demand with continuing pressures on stock and limited options for occupiers looking for space over 20,000 sq ft. The retail offer is also changing. Increased footfall on The Moor is continuing to challenge the traditional prime retail pitch of Fargate.
£
KEY CONTACTS
Office HeadPeter WhiteleyPartner+44 114 241 [email protected]
Investment MarketsNick WalesPartner+44 114 241 [email protected]
Occupier MarketsBen WhiteAssociate+44 114 241 [email protected]
ResearchDarren MansfieldAssociate+44 20 7861 [email protected]
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