NEWCASTLE and the wider North East can be quietly confident about the prospects of its commercial property market in 2013.
Newcastle is well placed to emerge from the property slump of the past four years. The Science Central site in the heart of Newcastle that is set to become a 12.1 hectare hub of science-led innovation, coupled with the new ‘city deal’ that will unlock £92m of investment in the region, means that the city can look forward to an exciting 2013.
When it comes to city centre development, most big schemes take years to actually make it from the blueprint to reality. The completion of Science City along with other projects in the area, such as Stephenson Quarter behind Central Station, Gateshead Quays and the redevelopment of Gateshead town centre, all mean that we have a strong pipeline of activity taking the commercial property sector into 2013.
In the absence of conventional development finance, the pro-active and supportive role played by the local councils in these sorts of schemes should be applauded.
By enabling and promoting these schemes, local councils can seize the opportunity to stake a claim that Newcastle/Gateshead remains one of the key cities in the commercial property arena outside London. However, we mustn’t be complacent and over-optimistic in the North East commercial property market.
The office sector remains sluggish, with prime rents struggling to get close to the pinnacle they achieved at the height of the property boom. There has been a reduction in the amount of Grade A quality stock in the city centre and few developers are either able or prepared to build speculatively in this market. It is also very quiet in the once-buoyant out-of-town market.
The retail sector continues to struggle with vacant units in Eldon Square and Metrocentre – evidence that the North East is not immune from the retail downturn with recent high-profile failures such as Comet.
The office market is driven by confidence and, until genuine confidence returns to the North East economy, the Newcastle office market will struggle to hit its stride once again. Large occupiers are delaying their decisions to move. Having said that, the boost provided to the regional economy by the ‘City Deal’ will undoubtedly help.
There has been further confidence in the region with the redevelopment and opening of a number of hotels with brands such as the Jury’s Inn, Hotel Indigo and Ramada Encore taking up residency.
Whilst it would be foolish to say that we are out of the woods yet, with a variety of exciting and prestigious developments in the region set to become a reality over the next couple of years, there is every reason to feel more confident.
:: Ian Ward, real estate partner at the region’s leading law firm, Dickinson Dees