The state of the region 

When Property Week magazine came knocking on the North East’s front door with a request to examine the ‘state of the region’ it was time to assemble significant fire power that covered all aspects of the North East’s commercial property sector. Here is specialist property writer Chris Dobson’s round up of what was discussed

Against a background of the now too-familiar Brexit decision there was optimism in the air with demand for space in the region never greater. There are real opportunities through existing and new sectors.

Devolution was another familiar subject with the call for action through the Invest Newcastle vehicle comprising Newcastle City Council, Northumberland County Council and North Tyneside.

Through this the USPs were clear. Invest Newcastle delivers low occupational costs, there is an available and loyal labour pool that is flexible and more talent is being brought through via the region’s universities. Engineering talent in particular is being produced.

We need to these get strong messages across – offshore wind potential, the existing port and airport, East Coast connectivity. All that is needed is political will and private sector support.

After all there is already evidence of public and private sectors working together successfully. The Legal & General funding agreement for Science Central, for example, which should see office development starting shortly, and the Newcastle City Council head lease agreement at Stephenson Quarter that brought forward The Rocket which then secured the letting to Convergys is a first-class example of public sector support.

There is further investor interest in Newcastle with the sale of Sandgate House, one of Newcastle Quayside’s outstanding office buildings, to a private client of Rougemont Estates for £10.75 million, reflecting a net initial yield of 5.88 per cent, being a prime example.

However, hotel and student accommodation developments have taken key city centre sites. This is a concern as student accommodation needs 5000 units but 7500 units are being brought forward. This over-supply situation may not impact on Newcastle’s city centre but edge-of-city-centre developments could be challenged.

There is the need to encourage more office development – there is presently no new prime office space available in the city centre – headline office rents need to rise above £23 per sq ft. The formation of the joint venture vehicle between Newcastle City Council, Legal & General and Newcastle University will ensure that we will see a speculative office building of 100,000 sq ft on site at Science Central during the middle part of this year.

Delivering business space enables locations such as Newcastle to compete for inward investment and that means employing more people and putting fire into the regional economy not just in the city centre but in the surrounding areas of Greater Tyneside where the majority of office workers live.

So the success of one authority has positive benefits for others and the overall attraction of this part of the North East region is clear to be seen. Take the recent Convergys letting – that could have gone to Northern Ireland. Hitachi Rail Europe’s arrival at Newton Aycliffe was a major coup having headed off some 40 UK locations in a lengthy process. Inward investment is a far from easy task.

Returning to Devolution, with fingers crossed, 2017 could see salvation with Newcastle City Region emerging as Invest Newcastle combining the national and international marketing of Newcastle, North Tyneside and Northumberland. This would be a tremendous step forward and, with a degree of enlightenment, other local authorities which have said ‘no’ to devolution could join this new vehicle in due course. Why not, I ask, make this offer to Cumbria too, creating a ‘Borders’ approach given the degree of EU uncertainty north of the Border?

Inevitably the A1 north of Morpeth and its link to Scotland was discussed. With plans to dual it so far into mid-Northumberland but no further, the single carriageway link to the dualled A1 at Dunbar is both dangerous and wholly inadequate.

HS2 continues to cause some head scratching over the proposal to travel from London to the North East via Birmingham, Manchester, then though a tunnel under the Pennines to Leeds and onwards to York. And yet there is the east coast plain, a flat area which was recognised by the Victorians as the sensible place to build a railway.

The aforementioned Hitachi has a contract to build a fleet of trains for the East Coast Main Line so the North East’s business community will be able to travel from 2018 to London in enhanced comfort. So why the obsession with the west of the Pennines as the future, preferred, route to the North East?

Indeed the issue of speed begged some comment. Yes of course it would be useful to get to Leeds and Manchester faster than at present but does the current fastest time from Newcastle to London at circa two hours 30 minutes really help business by trimming that down to, say, two hours?

A final thought. To make the Invest Newcastle brand work there is a need to develop, with relevant professional teams and Local Authorities, the propositions that deliver short, medium and long-term objectives. Possibly driven by Developing Consensus, now with G9 within its ranks, there is an immediate opportunity to develop a strategy to address its key audiences within a clear timetable. This could include elected members and officials of the three local authorities, MPs and other opinion groups and possible partners. A fully articulated and visualised proposition could then be communicated to and agreed with appropriate with stakeholders. 2017 is the year to take this forward.

 

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