City occupiers upgrading their accommodation prompted an increase in demand for good quality office stock in Sheffield last year, according to commercial property experts Knight Frank.
Data taken from Knight Frank’s latest Regional Office Market Presentation research (ROMP) - an online interactive tool which provides market comparisons of key regional UK cities – indicates that new and grade A supply, particularly in Sheffield’s core city area, was steadily absorbed during 2010.
As a result of occupiers upgrading their accommodation, good quality stock levels reduced by 20% last year to stand at 285,000 sq ft.
However, falling grade A supply was met by an increase in poorer quality stock coming to market with the knock-on effect that the vacancy rate remained relatively elevated throughout 2010 - 12.8% by the end of the last quarter.
Tim Bottrill, partner at the Sheffield office of Knight Frank, said: “Generally, we anticipate relatively robust levels of take-up over the first half of 2011, with expectations of up to 80,000 sq ft of space to transact in the first quarter of this year alone.
“In the absence of any speculative development, Grade A supply will steadily diminish through the year and consequently, we expect both rents and incentives to harden.
“The same cannot be said for poorer quality second-hand accommodation, however, With supply increasing, and relatively low demand for it, continued downward pressure will remain on rental levels throughout the first half of 2011.”