Darron Barker, Director and Head of our office in Newcastle, examines the key influences on the North East commercial marketplace today.
Recent in-house research shows that office space take-up in Newcastle City Centre has risen by 18% during Q2 over Q1. Contrasting this to out-of-town take-up which has fallen, it is interesting to reflect where the North East currently stands in terms of growth.
Over the past five years Newcastle City Centre, its East Quayside and Gateshead East Quayside areas have all witnessed considerable investment in terms of regeneration. With the re-development of Gateshead Town Centre now also firmly underway, all have significantly developed in terms of their offerings.
Redevelopment has transformed region and attracted key players
Eldon Square’s St Andrew’s Mall extension has attracted major retailers. Several high profile hotels have now opened in and around the city centre including Sleeperz, Sandman Signature Hotel, Jurys Inn and previously derelict buildings are being brought back in to life again. An example of the latter is the £37 million pound transformation of the historic Kings House and adjacent former Grade II listed railway warehouse on Forth Banks, into Newcastle’s new “state of the art” police headquarters.
Development areas such as the Stephenson Quarter, St James’ Boulevard and wider Gateshead Quayside areas are all being reinvigorated, along with the development work being undertaken at the Lower Ouseburn valley. As a result, businesses looking to set up or expand, are finding themselves spoilt for choice when it comes to both “character” and modern premises within the city centre.
Tourism generated £1.26bn for the North East economy in 2011
Sustained regeneration has significantly increased the appeal of the region to visitors both from the UK and abroad. Before it disbanded, One North East made positive inroads into highlighting the unique cultural and historical offerings of the North East.
The Newcastle/Gateshead Initiative has just released figures which show that tourism generated £1.26 billion for the North East economy in 2011. In addition, 1.7 million visitors stayed overnight in the neighbouring city and town, an increase of 5% from 2012, an impressive achievement given difficult economic conditions.
Manufacturing boosting local economy
Signs of growth within the North East appear positive, boosted by Nissan’s expansion plans to build an extra model at its Sunderland plant from 2014. The move promises to create over 1000 new jobs (225 at the factory and 900 to component suppliers).
This is in addition to increased inward investment such as Hitachi Trains’ forthcoming £77m production plant at Merchant Place’s Amazon Park. Both investments will help maintain the North East’s appeal to the manufacturing sector.
Fall in demand and take-up due to continued strain on economy.
Despite excellent out-of-town developments such as Cobalt and Quorum Business Parks, demand for the space on offer there and elsewhere appear to have fallen in recent months. The economic climate remains challenging and is the main reason for the reduced take-up.
Cost effective deals to be had current and future tenants should be advised that competitive rates and deals can be done by looking slightly further afield, and by not being afraid to negotiate with their prospective landlord.
Many of the commercial property units have very attractive aspects including excellent transport links, generous on-site car parking and modern facilities. The key for tenants is to ensure that all options are properly considered.
The North East has many ‘strings to its bow’ and we are positive that despite seasonal ups and downs of the marketplace, it will prove resilient to any continuous downturn – whether in or out of town.