With the year ending on Tyneside with two major deals that removed a significant amount of Grade A office space from the market, the funding deal to kickstart Silverlink’s Stephenson Quarter development looks to be perfectly timed.
The two offices deals were the sale of the 100,000 sq ft Regent Point building at Regent Centre to Newcastle NHS Trust and the letting of the 35,000 sq ft EQ 5 building, Quayside, to Barclays Bank. This represents a take-up of Grade A space with only some 30,000 sq ft remaining at Wellbar Central, Gallowgate and little Grade A space elsewhere.
“With this in mind, the start on site last year on the Stephenson Quarter was spot on for the market,” said Tim Evans, director, Knight Frank, Silverlink’s adviser.
“For work to be well under way on this 10-acre site represents a successful funding partnership between Silverlink, Aviva Investors, Newcastle City Council, Royal Bank of Scotland, Miller Construction and the North East Local Enterprise Partnership.”
Evans added: “This is a great example of the public and private sectors working together at its very best.”
Silverlink agreed terms with Aviva Investors that secured the forward funding of “The Rocket”, a multi-use building which forms an important part of the first phase of this major regeneration project.
The building will provide 35,000 sq ft of Grade A offices and 357 parking spaces and will be developed alongside the 251-bedroom, Crowne Plaza Hotel and conference centre.
Michelle Percy, director, Silverlink says Aviva Investors, through its Lime Property Fund, will ultimately take ownership of The Rocket which will be underpinned by a 35-year non-occupational lease to Newcastle City Council.
“The transaction has been finessed over several months to deliver what will be an exciting mix of offices adjacent to the upscale Crowne Plaza Hotel and provide the catalyst for further regeneration of the Stephenson Quarter,” says Ms Percy.
Just as 2013 was a pivotal year for this innovative funding deal, this year will see several on-site landmarks such as tower cranes on site to mark the commencement of the steel frame for The Rocket and the core and floors for the seven-storey, Crowne Plaza hotel, both of which will be opened in July, 2015.
Dickon Wood, director, investment at Knight Frank, said: “Funding deals such as this are extremely difficult to pull together and without the involvement and commitment of all of the stakeholders, rarely get off the ground.
“That Silverlink has been able to secure funding in the current climate is testament to the developer’s determination to drive the scheme forward and the vision of Newcastle City Council in its support for Stephenson Quarter, something Newcastle can be proud of. Being able to secure Aviva Investors as a key member of the team that will deliver this project underlines Newcastle’s status as a key regional centre within the UK.”
David Clouston, MD of Silverlink added: “This funding deal has enabled the start of the process of redeveloping the mix of listed buildings, alongside the architecturally dynamic new buildings, into a new heart for the city delivering 300,000 sq ft of commercial space, restaurants, apartments and public space.
“As such it is one of the largest regeneration projects the city has seen for many years. It has relied on the skill of our professional team. This is such a vital regeneration scheme for the city. It will bring exciting new space together and breathe life into the important listed buildings all of them linked to the rail heritage of the Stephenson family.
“It also allows for some significant improvement to the area surrounding Central Station and, most importantly, the development can accommodate new jobs.
“Newcastle will benefit from a project that would befit any European capital in a location that is particularly strong with, for example, PWC taking 23,000 sq ft in nearby Central Square South and Northumbria Police developing its own headquarters complex which will be occupied by over 500 staff. This is all very good news for Newcastle and the North East.”