National commercial property consultancy Lambert Smith Hampton (LSH) has been instructed to sell Foundry House in the heart of Sheffield’s Riverside Exchange Quarter, after securing a 20,000 sq ft letting to the Home Office in one of the city’s biggest office deals of 2018.
The Home Office, which is responsible for the safety and security of UK citizens, has designated Sheffield as the national processing centre for UK Visas and Immigration. Foundry House will operate as a training centre for border control operations.
The four-storey building is now fully let to the Government, with the remaining 6,000 sq ft occupied by the Health and Safety Executive (HSE), the body responsible for the encouragement, regulation and enforcement of workplace health, safety and welfare. Foundry House provides regional HSE operations and support for the Sheffield and South Yorkshire areas.
LSH is seeking offers of more than £3.87m for Foundry House, reflecting a net initial yield of nine per cent after costs, with strong demand anticipated from UK property companies, overseas investors and family trusts.
Foundry House is immediately adjacent to one of Sheffield’s most exciting development projects, the £175m West Bar Square regeneration scheme by Urbo, which will feature 700,000 sq ft of office, residential and leisure space.
Tom Burlaga, associate director at LSH’s Sheffield office, said: “We are delighted to secure a 20,000 sq ft letting to the Home Office. The average deal size in the city centre is below 5,000 sq ft so this is a standout letting in the market.
“It’s also a great deal for Sheffield as the Government has made a commitment to establishing an immigration facility in Sheffield which will bring hundreds of jobs to the city. With the proposed West Bar Square development, the Riverside Quarter is set for an exciting period of improvement.”
Luke Symonds, associate director – Capital Markets at LSH, said: “Now that Foundry House is fully-let, we are excited to launch an investment sale. We anticipate plenty of interest as there is good potential for market growth. There is strong demand from occupiers for this type of stock but limited availability in the city centre. Many offices have been converted to private and student residential accommodation so there is not a great deal of quality secondary stock.”
Combined office take-up across the city centre and out-of-town markets was 93,951 sq ft in Q1, up 25 per cent on Q4 2017 albeit down 81 per cent year-on-year, according to LSH research.
LSH’s latest Sheffield Office Market Pulse revealed that a total of 15 deals were completed during the first quarter, underpinned by the professional services sector which accounted for 36 per cent of total activity. Notable transactions include Spaces’ 25,000 sq ft letting at Acero Works and the Home Office’s relocation to Foundry House.
Across the city centre, grade A supply fell by 25 per cent over the quarter to just 110,000 sq ft which is split across seven buildings. Out-of-town, the situation is much worse, with just 16,285 sq ft of grade A space available across four buildings.