The people behind the Keep Sheffield Ugly campaign look set to be disappointed if the city’s property fraternity continues to get its way.
The rather unusual campaign, which has posters pinned up around Sheffield, is determined to keep the former steel manufacturing hot spot gritty, outdated and, frankly, ugly.
However, the private and public sectors are unwavering in their efforts to do the opposite, and transform Sheffield into a striking, good-looking and modern city.
The first challenge – a lack of supply of modern space – is already being tackled.
According to local agent Campbell & Co, the amount of regeneration set to take place both in and out of town in the next 18 months totals just short of 1m sq ft.
And Knight Frank’s recently published Sheffield central area activity report estimates that around 340,000 sq ft of speculatively built office space is under construction in the city centre.
With supply on the increase, the focus is shifting to where demand will come from.
Lambert Smith Hampton’s Rob Darrington says: “Historically, there haven’t been many people who want to get into Sheffield. It’s never been a target because, until now, we’ve not had the stock. It’s been a chicken and egg situation.”
That began to change last year when the Home Office signed up for 120,000 sq ft at Riverside Exchange – a significant deal for any UK city and a coup for Sheffield. Speculation is mounting that the Home Office is now looking to expand further by taking the neighbouring 70,000 sq ft speculative second phase of the scheme.
But local commentators believe that future demand is likely to come from existing occupiers, and point to HSBC, which announced plans in February to consolidate its various office buildings in London, Sheffield and Birmingham.
In Sheffield, the bank already has around 400,000 sq ft in five buildings at its Pennine Centre operation. Market observers suggest the financial giant will increase its presence to 600,000 sq ft – the largest ever requirement for Sheffield.
While discussions are shroudedin secrecy, it is believed HSBC is looking to lease a major site with bespoke buildings.
“HSBC hasn’t committed to a site yet, but it’s not rocket science,” says a local source. “It has some lease expiries that fall in over the next five to six years. There aren’t many schemes that can accommodate that amount of space. Castlemore’s West Bar is an obvious candidate.”
The £315m mixed-use development includes 500,000 sq ft of offices. Castlemore has just exchanged the development agreement with the local council, but declined to comment on speculation of a deal with HSBC.
Another significant requirement has emerged from the Department for Education & Skills, which is considering relocating from its offices at Moorfoot within the Inner Ring Road into a new building of between 150,000 sq ft and 200,000 sq ft, although no deal has been struck yet.
If HSBC and the DfES do relocate, up to 800,000 sq ft of the 950,000 sq ft in the development pipeline will be accounted for.
According to David Fletcher, director of inward investment at the newly created city development company Creative Sheffield (see box), there are plenty of potential takers for the remaining space.
“We’ve got at least 250,000 sq ft of pent-up demand from indigenous companies, mainly from the legal sector, where many firms have ‘made do’ in disparate locations and now want to consolidate into one building,” he says. “The public sector also has a number of major requirements.”
Whether occupiers are willing to pay the higher rents that come with modern space remains to be seen. To date, the city’s highest recorded office rent is £18.50 per sq ft, paid by Royal Bank of Scotland for 13,000 sq ft at No 1 St Paul’s Place in the Heart of the City development, opposite the Winter Gardens.
It is understood that an unnamed legal occupier has just agreed to pay £22.50 per sq ft – a new headline rent – at the scheme’s second phase.
With development proposals based on achieving at least £20 per sq ft, the market will need to change significantly. Castlemore’s planning director, Eric Hall, believes it will.
“We’re pursuing the West Bar scheme because we expect rents in Sheffield to increase markedly over the next couple of years,” he says.
Campbell & Co’s Alastair Campbell agrees, but cautions: “While there’s no reason why £20 per sq ft will not be achieved, Sheffield needs to be careful that it doesn’t lose its competitive edge over its regional rivals in the race to attract inward investment into the city.”
Development company sets out its stall
Creative Sheffield, the UK’s first city development company, was officially launched last month, under the guidance of new chief executive Ian Bromley, former director at the Ontario Ministry of Research & Innovation.
Formed via a merger of urban regeneration company Sheffield One and inward investmentagency Sheffield First for Investment, the company willwork with, but act autonomously from, regional development agency Yorkshire Forward.
Andy Topley, former chief executive of Sheffield First and now director of physical regeneration at Creative Sheffield, explains: “Creative Sheffield has four main tasks: to physically develop product in the city centre to attract and manage inward investment city marketing and to make best use of the city’s knowledge and technology base.”
The company has earmarked up to £80m for major developments and activities over the next two years. In total, it has set itself a target of creating 25,000 jobs over the next 10 years, as well as the development of specific business clusters that will attract further companies to invest in the region.
Topley acknowledges the urgent need for better-quality business space. “We’ve been pushing very strongly for grade-A space so businesses have a choice, but there is a danger of overdevelopment, so we need to be careful,” he says.
Retail developments move forward to deliver much-needed shops
Hammerson, which won outline consent for its prime £500m New Retail Quarter late last year, is about to appoint a consortium of architects to design individual parts of the 860,000 sq ft project, which will be anchored by a 260,000 sq ft John Lewis.
The developer is also awaiting a date for a CPO inquiry, due to start at the end of the summer. In the meantime, discussions have started with other retail anchors.
Carolyn Kenney, a director at Hammerson, says: “There will be a core of high-street staples alongside niche, boutique retailers. We’re talking to existing Sheffield retailers who want larger, flagship stores, such as Next and Topshop.”
When completed, the development will bring together the established shopping areas of The Moor, Fargate and Devonshire Quarter. Construction is dueto start on site next year with completion scheduled for 2012.
Meanwhile, RREEF’s neighbouring Moor Sheffield, the £600m overhaul of the Moor Shopping Centre, is on schedule to deliver its first shops next year (pictured below).
Sheffield city council has approved plans for Block Six, the first phase of the mixed-use scheme, which includes: 90,300 sq ft of shops a 57,000 sq ft market hall to replace Castlegate market 30,000 sq ft of leisure car parking and 1,100 student flats. The whole scheme will total around 3m sq ft.
