As the number of businesses courting expansion continues to rise the commercial property market, in some locations, is being pushed to its limits as the balance of supply and demand grows ever more disproportionate. Yet while this is creating problems in areas such as the West End of London, it is also creating opportunities for landlords seeking to let out space in growing regional markets.
This has been the case for commercial and residential lettings firm Sheer Challenge, owned by the Manzoor family. It has been attempting to let Grade A office space at Crown House in Sheffield since the development was created in 2010 with no luck, but is now enjoying a boom in interest due to the dwindling supply in the city depleted by business growth.
Although no details of potential tenants have yet been released, property agent Robert Lane has confirmed that “three or four” parties had expressed an interest in taking up space within Crown House, located opposite the Crown Court on West Bar. He believes that this sudden reversal of fortune for the £8 million, seven storey office block is due to the number of prospective tenants realising exactly how Sheffield’s low supply of office accommodation could affect them in the coming years.
He says; “I have done a survey and the average take up of Grade A and A/B offices in the city centre in the last three years is 150,000 square feet.
“There’s currently, at most, one and a half year’s supply if currently vacant offices are re-let.
“New builds are some way off which is why Crown House is increasingly attracting interest.”
At this point, Crown House has no tenants – and has in fact lain empty since development work was completed at the peak of the financial crisis. This has left the Manzoor family, who own the block, significantly out of pocket rather than benefiting from the £950,000 per annum rental income the property was expected to raise when building work commenced in February 2008.
Zulfi Manzoor discussed the impact the financial crisis had taken upon the project in 2010, saying; “No one knew the crisis was going to be so bad and by the time we did we had to see it through.
“A year earlier, maybe we could have found a tenant – a year later and we might have shelved the plans.
“As it is, it is the worst commercial decision we have ever made.”
Numerous developers and investors found themselves in the same position as the Manzoors, with a number of projects from this time still awaiting completion due to financial setbacks. Perhaps, if interest in Crown House continues to grow and the Manzoor family are able to fully let the property, the timing of the lettings will allow this to be one of the best, rather than worst, commercial decisions on the records of Sheer Challenge.
Do you think the developers of properties such as Crown House, who took a gamble during the recession, are set to be the big winners in the future due to dwindling supply?
