THE year of 2007 has been a year of mixed fortunes and whilst there is no doubt the credit crunch and other factors have created a slower market, the North-East does still continue to make progress and is perhaps as a region cushioned, unlike some of the rather more badly affected UK areas.
Frustratingly we have witnessed no development completions as a result of the challenging planning regime operated for around the previous 18 months.
It is scandalous a city the size of Newcastle should have no development completions in one year and therefore no Grade A office space.
Given development pipeline restrictions, the likelihood of a new headline rent in 2008 will be supported but the challenge will be delivering a scheme to support the new rent.
At present, there is only one scheme under construction and due for completion in 2008 – Baltic Place, a development by the joint venture of City & Northern and the Robertson Group, situated on the south bank within Gateshead Quays.
The only other schemes which are close to a ‘start on site’ date are Strawberry Place, a development by the Hanro Group; Wellbar House, a development by Mrs Siddique; and the Downing Developments site to the north west corner of St James Boulevard opposite St James’s Park.
Other schemes currently being masterplanned or in planning include Multiplex’s East Pilgrim Street, Vico Properties off St James Boulevard, and Stephenson Quarter by Silverlink Property Developments.
In terms of take-up, on average we have witnessed between 500,000sq ft and 650,000sq ft per annum in the North-East, with the city centre representing some 200,000sq ft.
A number of the larger lettings which have taken place recently include Brewin Dolphin and Muckle LLP at Time Central, Government Office North East and Dickinson Dees, all of which have been pre-lets. This is perhaps a measure of the market with the lack of stock and therefore choice. Currently there are five requirements of more than 100,000 sq ft within Newcastle city centre.
It is an unprecedented amount of demand which is difficult to satisfy given the lack of development pipeline. This is hugely frustrating not only for occupiers but also for the city as a whole as it is important we maintain the overall ‘energy’ and growth.
Very often we are in competition with Leeds and Manchester and therefore it is essential we have product to compete.
With headline rents in Leeds and Manchester at £25 and £28 per sq ft respectively, Newcastle as a city still offers excellent value for money.
Clearly, the out of town market has very different dynamics with the main characteristics being an oversupply of accommodation and lower headline rent.
Nevertheless, the out of town market has, similarly to the city centre, experienced a large degree of success with some major lettings over the course of the last few years, including North Tyneside Council, Newcastle Building Society, IBM and National Grid.
The principal areas of activity have been focused at Cobalt, Quorum, Baltic Business Quarter and after a particularly slow start, Newcastle Great Park.
Over the years, Newcastle has been successful in moving away from its industrial image but if it is to be truly successful and establish itself as a ‘premier’ European city, planners, architects and developers need to work hand in hand to raise the design quality of the city’s offices.
Newcastle’s architectural heritage is an important part of the fabric of the city and provides the grain and character that attracts many people to live and work there. Whilst this must be adequately protected it is also important that it does not hold the city back.
Developers and planners must work in close partnership to deliver solutions that protect our heritage but ultimately provide buildings that can accommodate occupiers’ needs.
The legacy of visionary builders such as Richard Grainger and succeeding designers with flair and ability has made Newcastle a place for exceptional quality, second to none in the country.
Those involved in shaping the city’s future need to take up this baton and be seen as leaders, not followers, in creating the right environment for future generations.
Newcastle needs to embrace its heritage, build on a strong legacy and ensure that all parties work effectively together to help the city become one of the top European regional capitals.