The first business park scheme north of the Tyne since the economic downturn will begin to take shape this week, following a £460,000 cash injection from the North East Investment Fund.
The £2.6m West Chirton project, which will provide a 34,000 sq ft, 17-unit space for businesses, is expected to employ more than 150 people during the building phase, due to be completed next June.
Washington-based Hellens Group approached the North East LEP, which manages the multi-million pound Growing Places Fund as part of its North East Investment Fund, to raise the loan to begin work on the park.
It also received £1.1m from the European Regional Development Fund (ERDF) and invested its own money into the project.
The firm, which specialises in land and property regeneration, is also nearing completion of the Teal Farm development that was also revived via a £200,000 Growing Places Fund loan and a £680,000 ERDF grant.
The £1.2m project at Washington has four units and 19,000sq ft of space, and is due to be finished at the end of January. The scheme supported more than 100 construction jobs and is expected to lead to 124 more when the units are occupied.
Hellens chief executive, Gavin Cordwell-Smith said: “The banks aren’t lending for speculative property building even where there is a proven case and proven demand.
“The site is land we already owned and had bought pre-credit crunch to develop.
“The project was stalled for five years because we couldn’t get funding. It’s a very good location close to the A19 and just north of the Tyne Tunnel, just off the Silverlink roundabout.
“The offshore and manufacturing sectors are active on the north side of the Tyne at the moment and we hope to pick up demand from businesses for accommodation.”
“At Teal Farm, we had built a previous terrace in 2008 and let it at the height of the recession. But you still can’t get bank finance even though the demand is there.
“The LEP’s help has been vital. Without it we wouldn’t be building the business parks.
“We are very grateful to the North East LEP for supporting us. These are the first two speculative developments in the North East since the credit crunch.”
The North East Investment Fund includes the Growing Places Fund which is designed to provide loans for infrastructure, housing and economic development projects that stalled during the recession and have been unable to access finance from the banks.
Jeremy Middleton, chair of the North East LEP’s investment panel, added: “Hellens Group’s two business park projects are precisely the kind of developments that the LEP’s North East Investment Fund was set up to support. They have created jobs during the construction phases and will provide accommodation for further job creation once they are occupied.”