Member Article

Sheffield’s commercial property market on the rise

A Yorkshire property expert has declared that investor ‘appetite’ has returned to regional centres including Sheffield, following a clutch of transactions in recent months.

According to Rob Hepworth, associate at the Sheffield office of Knight Frank, 2013 is proving to be a watershed year for UK commercial property as the economic recovery draws more investors “off the sidelines”.

As well as demand picking up, he claimed, there is also a notable change in in the nature of commercial property stock in demand, with regional offices and industrial premises back on investors’ shopping lists.

Hepworth said: “Recent transactions towards the end of 2013 highlight that investor appetite has returned.

“A selection of the year’s notable regional deals includes the 6,096 sq ft retail unit with ancillary office space above on Fargate.

“Home to current tenant O2, the building was sold by vendor M&G Real Estate to a private investor in November for £1,650,000.

“With a net initial yield (NIY) of 11.68 per cent, this prime asset generated strong interest from a cross section of potential purchasers.

“This is one of only a few high street retail deals done in Sheffield recently, so is an encouraging sign, but this remains an commercial property area of that is still working through structural changes.”

Another November highlight was the sale of Unit 8 Broadfields Business Park, for £865,000.

Sold by vendor JF Finnegan/Primesite to a private investor for whom Knight Frank purchased the adjacent unit in December 2012, and which is also let to current tenant Synectics, the 5,642 sq ft building offers a NIY of 9.6 per cent.

Hepworth added: “6.9 per cent represents the long term average prime yield for regional offices as a whole, although the flexible nature of most leases currently being signed mean that there are very few ‘prime’ opportunities for buyers currently in the market to test this.

“Prime regional yields are thus currently stronger than their long-term average.

“The latter half of 2013 has seen increased regional transactional volumes in the UK including Sheffield with improved pricing encouraging further sales.

“Where pricing expectations are realistic and the product backed by strong fundamentals, we have seen a dramatic increase in requirements for stock.”

This was posted in Bdaily's Members' News section by Mark Lane .