A NEW record for office rents was set in Sheffield last year as the city became one of only three key regional property markets where headline office rents rose, according to research by property consultant Knight Frank.
Rents hit £20 a square foot with the completion of the largest deal of the year – the letting of 16,700 sq ft of offices in Ventana House on the city’s Digital Campus to law firm Kennedys.
Knight Frank partner Tim Bottrill hailed the Kennedys deal as a strong example of the robust demand evident for the very best city centre accommodation.
Knight Frank is forecasting that more than 80,000 sq ft of quality office space could be taken up in Sheffield city centre in the first six months of this year alone and says there has been a 20 per cent reduction in the supply of Grade A office space as a result of the lack of development during the recession.
Only one development was completed in central Sheffield last year – Sheer Challenge’s Crown House, opposite the Law Courts on West Bar – and, while refurbishment of The Balance – formerly City Plaza – on Trippet Lane is nearing completion and likely to address the demand for Grade A refurbished space in the city, Mr Bottrill warns Sheffield could be facing a shortage of quality office space in a year to 18 months.
According to Knight Frank, ltake-up of small to medium-sized warehouses was healthy throughout 2010 and there was a clear revival in demand for big sheds, prompting the belief that the market will remain buoyant in 2011.
Last year also saw a “notable improvement” in property investment in South Yorkshire, with recorded transactions increasing by 45 per cent.
Most investment transactions in the region were driven by private investors and property companies and demand for prime and quality secondary property remains resilient, according to Knight Frank.
“There is life in the South Yorkshire investment market, however, there is no substitute for strong local market knowledge,” said Knight Frank investment surveyor Andrew Harrison.
Knight Frank’s report says South Yorkshire’s residential land market finally came to life in 2010, after two years of relative inactivity, but, developer interest remains highly selective.