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Booming Sheffield office market hits 40-year high

Upmarket Charter House will have its own entrance on to Charter Square.
Upmarket Charter House will have its own entrance on to Charter Square.

What’s 50p between friends?

Space in Grosvenor House in Heart of the City Two, which HSBC decided not to take, is being advertised at a Sheffield record of £25 per sq ft, up 50p on the previous high.

Development consultant Guy Gilfillan of Colliers in Sheffield city centre.

Development consultant Guy Gilfillan of Colliers in Sheffield city centre.

The figure reflects a booming property market.

Most Grade ‘A’ offices are full, or nearly so, sales of multi-million pound blocks are brisk as major investment funds seek guaranteed returns, and developers are lining up to build.

Development consultant Guy Gilfillan, who started as a surveyor with Eadon Lockwood and Riddle in 1979, said the market was the best he had seen.

But new developments, sales and rental growth don’t happen in a bubble. They are driven by demand from business.

How Sheffield Hallam University's 37-storey tower could look.

How Sheffield Hallam University's 37-storey tower could look.

Now working for Colliers, he is representing a consortium bidding to build Sheffield Hallam’s 37-floor Sheaf Tower near the station. Colliers was also involved in the recent sale of Citygate S1 near Moorfoot to Longmead Capitol for £17.82m.

He said: “Having been around for nearly 40 years, the office market’s in the best position I’ve seen. Sheffield has transformed from a secondary market to a location that’s attractive to prime UK and international funders.

“It’s in a sweet spot and other cities are noticing and thinking they’d like to have some of that action.”

A central business district is emerging around the Heart of the City developments, replacing the traditional two-mile ribbon from Castlegate to Moorfoot, he added.

Firms tend to cluster together to drive trade, while modern offices help retain staff.

He added: “Sheffield is competing with other cities for bright young things to take, particularly tech businesses, forward. They don’t work out of old space because they want to retain people.”

Big ticket sales this year total £83.42m. They are: Citygate for £17.82m to Longmead Capitol, 3 St Paul’s Place for £24m to M&G, Acero for £26.6m to Britannia Invest A/S and The Balance for £15m to Kames.

In the last two years investment is more than £137m and Colliers predicts it will exceed £150m by the end of the year.

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Mr Gilfillan added: “That’s a lot of space transacted and it shows a healthy appetite from major funders for investment products in Sheffield. They see prospects for rental growth, tenant demand and long term capital growth.”

PROPERTY EXPERTS CELEBRATE RECORD RENT

It is a new address that’s billed as ‘best in the North’.

Charter House is space over three floors in HSBC’s under-construction building on Charter Square in the city centre.

The banking giant had an option over the whole block, but 26,000 sq ft was ‘swing space’ that it could take or leave when its requirements became clear.

Its refusal has handed developer Sheffield City Council the chance to set a record rent of £25 per sq ft for ‘the most upmarket offices in the city’.

HSBC's entrance to Grosvenor House will face the rear of John Lewis.

HSBC's entrance to Grosvenor House will face the rear of John Lewis.

Number One Charter Square will have its own entrance, HSBC’s entry will be on the other side of the building facing the rear of John Lewis.

Tim Bottrill, of agents colloco, said: “We’re saying it’s the best office address in the North of England. It’s a superb opportunity to attract the best businesses into the city centre.”

Rents have crept up from £23 per sq ft a year ago as space dwindles, he added.

The new record was approaching the level at which developers could launch building projects without requiring public money, he added.

CITY GROWTH

Sheffield is on the up.

Sheffield is on the up. A record number of firms are moving into the city centre creating a buzz in offices, restaurants and shops. The Star is celebrating this new vibrancy in association with Sheffield Business Improvement District.